Sources told FOX Business’s Charlie Gasparino that investor underwriters say they are eager to buy shares amid a trade explosion.
The Robinhood trading app said Thursday the Massachusetts Securities Division is considering revoking its license to work in the state over the alleged failure to adequately protect customers and their assets.
In a post on his blog, Robinhood said the move was “elitist” and against everything the company stands for.
“The complaint reflects the old way of thinking: that new, younger and more diverse investors do not have a place in the market,” the report said. “By trying to stop Robinhood, the division is trying to bring its residents back in time and re-establish the financial barriers that Robinhood has set up to break down again. have, to enable. “
Robinhood said he had filed a complaint and a request for preliminary injunction to prevent the state from proceeding with his case. The company said millions of Massachusetts users could be affected.
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Robinhood found itself in hot water earlier this year after a bunch of everyday traders signed up to buy beaten stocks like GameStop, AMC and Bed, Bath & Beyond. The consequent increase in stock prices caused significant losses for some private equity firms that shorted the shares.
Lawmakers were angry that Robinhood was forced to stop trading during the frenzy to comply with restrictions so customers could not benefit from market profits.
The move to possibly revoke Robinhood’s license is based on a state trust that went into effect in September. In the court documents, Robinhood claims that the trust rule is invalid under Massachusetts law and is preceded by federal law.
According to a trust standard, institutions and advisers must prioritize the interests of the client.
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Robinhood, which intends to go public, wanted to make it clear that it is a ‘self-directed’ brokerage firm that does not give investment recommendations or advice.
A Massachusetts Securities Division spokesman did not return FOX Business’ request for comment.
Massachusetts’s largest security regulator, William Galvin, filed a lawsuit against Robinhood in December for violating state law.
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Galvin said Robinhood “markets itself aggressively to Massachusetts investors without considering the best interests of its customers,” who are often inexperienced and use strategies such as gamification to encourage the app. It continued to attract customers using these methods, Galvin said, despite awareness of infrastructure deficiencies that led to disruptions and outages.
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The complaint also alleges that Robinhood’s listings with the most popular and most traded securities are similar to lists handed over to clients by brokers.
Galvin said there were 486,600 Massachusetts customers with a total value of more than $ 1.6 billion as of December.