The US state of Massachusetts on Wednesday, December 16, announced charges against stock trading app Robinhood, saying it had lured in inexperienced users and allowed them to trade in risky instruments like options without proper education.
The app also faced scrutiny after a young trader last June took his own life after his Robinhood account showed a negative balance of $730,000 based on options trades – a reading his family believes was erroneous. "As a broker-dealer, Robinhood has a duty to protect its customers and their money," Galvin said in a statement."Treating this like a game and luring young and inexperienced customers to make more and more trades is not only unethical, but also falls far short of the standards we require in Massachusetts."
In its statement, the state said approximately 68% of Massachusetts residents approved for options trading had"limited or no investment experience," and that the app has nearly half a million users in the state with accounts valued at more than $1.6 billion.