MorningsideMaryland News :The regulators from Massachusetts are demanding the revocation of Robinhood’s broker dealer license as there have been growing complaints about falsely enticing investors with tall claims of increasing the profits.
The whole practice is very risky given the extent of mammoth claims and promises which is mostly done with a view of attracting many investors who then feel cheated after being scammed.
The online brokerage firm quickly challenged the court order as Robinhood sued challenging a fiduciary standard of conduct which has been practiced. The counter claim is a part of authenticating the services which it has adopted as it is trying to invalidate a new rule to justify their action.
Investors were enticed with lucrative offers
Galvin has filed the case after he was able to determine several loopholes in the way the investors were promised with various promises as many of them were not true. Therefore, a case was filed against Menlo Park; California based Robinhood last year, in the month of December where huge surge in shares’ prices could be experienced after the company took to social media to attract investors.
However, after the noose which started to tighten on the trading company, Robinhood is keen to publicize the company with the initial public offering with an idea to regain its lost financial ground, as it was earlier charged of the same.
Galvin put down a stiff reaction on how Robinhood with the sole aim of attracting increasing investors was able to use very sweet tactics. He intended to lure the common investors by promising something which he couldn’t deliver later on.
He alleged that the whole mechanism of attracting investors was done with a well thought out strategy where the investors were firstly lured with the idea of playing a game. Even as inexperienced customers started to go deep in the marshy land. By the time they realize that they were brainwashed to invest in something which actually didn’t yield any positive results.
The case becomes the first of its kind which was handled by state fiduciary that took cognizance in September where brokers were sensitized about the investment related advice further.
Counterclaim filed by Robinhood
Robinhood in its lawsuit challenged Galvin’s charges that such a firm shouldn’t be viewed as fiduciaries of customers it said that the state legislature hasn’t done anything concrete and he lacked the authority for adoption.
Robinhood further added that the rule become an obstacle when it comes to federal regulation. He cited the rule of U.S Securities and Exchange Commission in 2019 which clearly rejected the points of Galvin. He was projected to be a highly aggressive trading regulator and has reacted to the lawsuit of Robinhood where he termed that the man has shown complete irresponsibility to the customers.
One thing is true that investors need to be highly alert while investing their money and it also relates to cross checking of facts so that they save themselves from getting scammed.