BOSTON (WBZ NewsRadio) — A legal battle is showing no signs of stopping between Robinhood Financial LLC and the Massachusetts Securities Division.
State securities regulators and Secretary of the Commonwealth Bill Galvin's Office filed a revised administrative case against the trading app on Thursday, seeking to revoke the company's license to do business in Massachusetts over long-standing allegations of exploitative business practices.
Galvin's office originally filed a complaint back in December of 2020, charging Robinhood with targeting inexperienced investors to make more trades on the app, and failing to prevent outages that have caused users to lose money.
The complaint came just weeks before the app surged in popularity in January amid a trading frenzy in Gamestop stock, partially fueled by a group of Reddit users.
"The facts we allege back in the beginning of our complaint are just as true today as they were then," Galvin said. "This is a company that really isn't interested in it's customers. And they're not really interested in playing by the rules, that is to say, by observing the requirements of not making recommendations to their customers that are inappropriate, [and] by making sure that their customers are not trading on things they don't know about."
State regulators said on Thursday that since that complaint was filed, Robinhood has "continued a pattern of aggressively inducing and enticing trading among its customers."
The company fired back at the move to revoke it's license by filing a motion in Massachusetts State Court, seeking a preliminary injunction in the state's case against them.
"We don't believe our customers are as naive as the Massachusetts Securities Division paints them to be," the company said in a statement. "Creating a list of companies that make apparel is not a recommendation. Giving people information about the performance of the stocks they own or watch is not a recommendation.”
The company alleges in the motion that the Massachusetts Securities Division’s Fiduciary Rule exceeds its authority under both "state law and federal law."
"Robinhood is a “self-directed” brokerage firm that does not make investment recommendations or provide investment advice," the complaint said. "By its own terms, the new [Fiduciary] rule does not apply to self-directed firms."
Galvin said that the motion from the company is simply a reaction "to the fact that they have been unable to make [the lawsuit] go away."
"They didn't attack the Fiduciary rule when we said when we announced it some time ago," Galvin said. "This is all about them getting to go out and continue to operate as they are and go public. And this is a fight we believe is worth fighting and we're going to fight it."
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Written by Rachel Armany
(Photo: Getty Images)