Online brokerage Robinhood on Thursday sued to invalidate Massachusetts’ recently-adopted fiduciary rule and block state regulators from continuing with prices it encourages inexperienced buyers to put dangerous trades with out limits.
Robinhood in a lawsuit filed in state court docket in Boston mentioned the fiduciary normal of conduct for broker-dealers that Massachusetts Secretary of State Bill Galvin’s workplace adopted final yr violates state and federal regulation.
A spokeswoman for Galvin didn’t reply to a request for remark.
Galvin, the state’s prime securities regulator, in December filed an administrative case accusing Robinhood of utilizing aggressive ways to draw inexperienced buyers and failing to forestall outages on its platform.
He accused the app-based service of utilizing methods that handled buying and selling like a sport to lure younger, inexperienced prospects, together with having confetti rain down for every commerce made on its app.
The case is the primary enforcement motion introduced below a state fiduciary rule adopted in September that raised the investment-advice normal for brokers.
Regulators are searching for a effective and order requiring Robinhood to interact a compliance guide to evaluation its platform and insurance policies. Robinhood has denied wrongdoing.