The settlement extends beyond the gamification dispute, addressing cybersecurity issues flagged after a November 2021 data breach affecting 117,000 Massachusetts customers. An unauthorized third party accessed customer information through a phishing scam, prompting Galvin to criticize Robinhood’s “deficient” cybersecurity policies.
Robinhood To Pay $7.5M To Exit Mass Regulator Probe : Robinhood Responds
A Robinhood representative did not immediately comment, but the company’s deputy general counsel stated they are pleased to put the matter behind them. The company maintained that it rejects the characterization of its app as ‘gamified,’ focusing on historical supervisory control practices and asserting that the settlement does not find violations in the app’s digital engagement practices.
Robinhood To Pay $7.5M To Exit Mass Regulator Probe : Looking Ahead
Galvin’s strict fiduciary rule, adopted in March 2020, played a pivotal role in the case. The secretary accused Robinhood of targeting young, inexperienced investors, leading to risky trading behavior. While a superior court initially ruled in Robinhood’s favor, the Supreme Judicial Court’s landmark decision emphasized Galvin’s broad powers to “protect investors” and raised questions about the evolving distinction between broker-dealers and investment advisers.
