Massachusetts securities regulators filed a complaint against Robinhood Financial LLC, accusing the popular online brokerage of greediness and irresponsibility.

Massachusetts Secretary of the Commonwealth William Galvin said that the reason behind the complaint against Robinhood Financial is their gamification of investment and the failure to protect amateur investors in return. The complaint against the company is the first of its kind, after the enforcement of the Massachusetts Fiduciary Rule, which was put to work last September.

"This is a very reckless company when it comes to these investors. They're interested in expanding their market base, they're not interested in serving their investors," Galvin told CNBC.

William Galvin alleged the trading app of greedy marketing, and making use of novice investors, and ignoring the fact that they can lose a lot of money since they are not protected in any way. "The worst aspect of what they do clearly is the way they are gamifying the idea of investing," William Galvin told CNBC.

Robinhood Financial that was founded in 2013 owes its success to the current economic circumstances imposed by the Covid-19, the growing number of remote home jobs made it easy for the company to gain a large new segment of targeted customers who wouldn’t be interested otherwise.

The company acquired 3 million new customers in the first four months of 2020. This can be an indicator that the recession caused by the corona-virus is one of the important key factors that made so many people scale their business to the investment niche, although they didn’t know much about it. "The pandemic has contributed to their growth," said Galvin.

"People operating remotely from their homes, being easier to reach, more enticed to go online with this, to engage in day trading. They have taken an audience of very unsophisticated persons and exploited them." Galvin added.

The company’s earnings come from the trades that their customers make, and with the growing number of Robinhood’s app users, it is extremely hard if not impossible to protect all of these investors.

Robinhood Financial have their say

However, the Robinhood Financial spokesperson had another opinion regarding the complaint, the company replied to the complaint saying: "Robinhood is a self-directed broker-dealer and we do not make investment recommendations. Over the past several months, we've worked diligently to ensure our systems scale and are available when people need them. We've also made significant improvements to our options offering, adding safeguards, and enhanced educational materials. Millions of people have made their first investments through Robinhood, and we remain continuously focused on serving them."

Nevertheless, Massachusetts regulators don’t agree with Robinhood Financial. And they are keen to continue with their complaint, to protect the app users from what they perceive as a reckless and irresponsible business.

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