Nate Raymond
REUTERS/Brendan McDermid
A lawyer for Robinhood Financial LLC on Wednesday warned a Massachusetts judge that allowing state regulators to enforce a new fiduciary rule against the company could disrupt modern retail trading and drive low-cost brokerages out of the state all together.
Timothy Burke, a lawyer for Robinhood at Morgan, Lewis & Bockius, made those remarks as he urged a state court judge in Boston to block Massachusetts Secretary of State William Galvin from moving forward with his extraordinary enforcement case.
Menlo Park, California-based Robinhood sued in April after Galvin moved to revoke the popular online brokerage s license to operate in the case after charging that it encourages inexperienced investors to place risky trades without limits.
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Robinhood warns judge of dire industry consequences from Massachusetts case
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Massachusetts Regulators Seek to Revoke Robinhood’s License; Brokerage Sues
Massachusetts regulators on Thursday sought the revocation of Robinhood’s broker-dealer license after charging that it encourages inexperienced investors to place risky trades without limits, while the online brokerage sued to invalidate a new rule underlying the case.
Massachusetts Secretary of State Bill Galvin sought the revocation in a revised administrative case announced shortly after Robinhood sued in state court in Boston to challenge a fiduciary standard of conduct his office adopted last year.
Robinhood, which is seeking to go public through an initial public offering, in a blog post called the regulator “elitist” and said it was seeking to “reinstate the financial barriers that Robinhood was founded to break down.”