Massachusetts escalates legal battle with Robinhood, wants it out of the state
State officials seek to revoke the controversial stock trading app’s license.
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State officials seek to revoke the controversial stock trading app’s license.
Robinhood hasn’t ever fully recovered their public goodwill after infamously halting trading on GameStop and other “meme stocks” earlier this year. It was quite the opposite, really, as the situation got the eyes of federal regulators (and Elon Musk).
According to Bloomberg, late last month Robinhood tried to file for an IPO in spite of the controversy surrounding their company. So a stock trading app company would itself be opened up for trading its own stock on the NASDAQ. At the time the buzz was around the potential $40 billion IPO value Robinhood might’ve been valued at.
But along with the hype comes the scruples.
According to CNN, yesterday the Massachusetts Securities Division accused Robinhood of failing to account for fractional shares being traded on the platform, and that the company "continues to entice and induce inexperienced customers into risky trading."
To that end, Massachusetts is trying to revoke Robinhood’s trading license for the state. It’s actually a legal fight ongoing since December last year, according to this legal filing by the Commonwealth of Massachusetts.
Robinhood’s blog post responding to this most recent move by the state pulls no punches:
“The complaint reflects the old way of thinking: That new, younger, and more diverse investors don’t have a place in the markets. By trying to block Robinhood, the division is attempting to bring its residents back in time and reinstate the financial barriers that Robinhood was founded to break down. We will stand with our customers to enable them to have the investing experience they want. We will not succumb to unfounded, politicized allegations and unreasonable demands from the Massachusetts Securities Division. We welcome the opportunity to correct the record on both the facts and the law, and expect to prevail in state court.”
A reaction that seems emotionally resonant on its own. Yet fiascos like having to pay the SEC $65 million last year for misleading consumers, as well as a 20-year-old killing himself over money he thought he owed to Robinhood, dampened the mood.
In other Robinhood related news today, they temporarily halted the trading of Dogecoin after it saw a growth frenzy that brought it as high as $0.30.
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