Robinhood’s Marketing Leads to Massachusetts Securities Regulator Seeking to Revoke Licence

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The securities regulator of Massachusetts is looking to revoke the licence of cryptoasset friendly brokerage and stock trading platform, Robinhood, effectively halting its operation in the state.

It was stated by the head of the state’s securities division, William Galvin, that the crypto trading platform “continued a pattern of aggressively inducing and enticing trading among its customers – including Massachusetts customers with little or no investment experience,” As reported by Bloomberg.

The new filing is in response to a complaint filed by Galvin’s office in December 2020, alleging that Robinhood’s marketing illegally pursued inexperienced investors. The state referenced Robinhood’s recent activity, including a marketing campaign that provides customers with cash rewards based on new deposits, using this as evidence of a “firm culture which has not changed.”

Robinhood’s response to the new complaint, arguing that the suit could stop a larger number of users reaching the platform. In December, the company said that its platform had nearly half a million customers in Massachusetts.

In response to the claims against them, Robinhood accused the governing body of overstepping its obligations, believed the Securities Division’s rule was exceeding its authority. Further attempts exonerate themselves from the allegations were made.

Robinhood has faced growing pressure from regulators and users in equal proportion following its involvement in the controversial GameStop stop short-squeeze. Robinhood halted buying for GameStop stock in January 2021, drawing the indignation of the trading community.

Robinhood has also been plagued by several technical problems, which have reportedly resulted in significant losses for traders and prompted more legal action against the firm.

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