Massachusetts’ securities
watchdog will appeal against a ruling delivered last year in
favour of Robinhood following its enforcement action against the online brokerage in December 2020. Massachusetts Secretary of State, Bill Galvin, and
Robinhood will argue the validity of the regulator’s fiduciary duty rule at the Supreme Judicial Court of Massachusetts,
Reuters reported on Wednesday.Regulator Appeals Case at Supreme CourtGalvin in an administrative action against Robinhood sought to revoke the firm’s broker-dealer
license, accusing the firm of failing to protect its customers and
their money. As a result of this alleged failure, Galvin accused Robinhood of violating its fiduciary
duty rule which raised investment-advice standards for brokers in early
2020. Furthermore, the Secretary
alleged that the commission-free brokerage treated trading as a game and
implemented strategies to lure young and inexperienced traders. He also claimed that Robinhood rained down confetti on the phone screen of its
traders after the execution of each trade.However, in March 2022, Judge
Michael Ricciuti of the Suffolk County Superior Court in Boston ruled in Robinhood’s favour, arguing that the federal stance on the matter overrides the state regulator’s
requirements. Moreover, Ricciuti judged that Galvin went beyond his authority to
implement a regulation that conflicted with federal laws.At the time, Finance Magnates
reported that the ruling only impacted a part of the Massachusetts securities
watchdog’s action against Robinhood as the regulator could still pursue the
claims that the brokerage adopted unethical practices and even failed to
adequately supervise its employees.In February, Galvin appealed
against the ruling at the Supreme Judicial Court, asking the top Massachusetts
court to reverse the lower court’s decision. Oral presentations were then fixed for May 3, 2023. The latest information on the case reveals that Massachusetts’
supreme court will consider whether to revive the fiduciary rule or not.
However, Robinhood’s lawyers are maintaining the lower court’s ruling that
Galvin does not have the authority to implement such a rule, Reuters reported.Robinhood Settles with NASAAMeanwhile, seven state
securities regulators led by Alabama last month fined Robinhood’s brokerage
subsidiary up to $10.2 million for its outages in
March 2020. The regulators under the aegis
of the North American Securities Administrators Association (NASAA) settled
with Robinhood for its ‘operational and technical failures’ that hurt Main
Street investors during the period.On the contrary, Judge Edward
Chen of the US District Court in San Francisco in February dismissed a lawsuit accusing Robinhood Markets, Inc. of misleading
retail investors during an initial public offering almost two years ago.BlackBull adds DXtrade; Gate.io’s new license; read today’s news nuggets.
This article was written by Solomon Oladipupo at www.financemagnates.com.
