The online stockbroker giant, known for its no-fee platform, retaliated with a lawsuit to counteract the rule.
A Legal Duel: The Battle Lines Drawn
While Robinhood expressed disappointment post-verdict, Galvin heralded it as a victory.
He stated, “The rule strengthens the protective shield for Massachusetts investors when brokers advise on investments.”
Meanwhile, Lucas Moskowitz, Robinhood’s deputy general counsel, emphasized the company’s unwavering commitment to their Massachusetts clientele and hinted at further action after thorough review.
Strict Fiduciary Duty For Robinhood: A Dance with Common Law
Previously, a judge had nullified Galvin’s rule, citing it was in conflict with a former high court’s resolution.
However, Justice Wendlandt argued that the legislature can indeed infuse additional safeguards for investors via MUSA. She eloquently posited, “The rights under MUSA stand shoulder-to-shoulder with common law.”
State vs. Federal: The Tightrope Walk
Brushing aside Robinhood’s assertion that this fiduciary rule is misaligned with other states and the U.S. Securities and Exchange Commission’s guidelines, the court emphasized that Congress and the SEC were cognizant of states imposing fiduciary obligations but chose not to override them.
Galvin’s Broader Concerns
At the heart of this legal maelstrom, Galvin has voiced concerns about Robinhood targeting young, novice investors, nudging them towards risky trading.
