Massachusetts’ securities watchdog on Wednesday will appeal against a ruling delivered last year in favour of Robinhood following its enforcement action against the online brokerage in December 2020. Massachusetts Secretary of State, Bill Galvin, and Robinhood will argue the validity of the regulator’s fiduciary duty rule at the Supreme Judicial Court of Massachusetts, Reuters reported on Wednesday.

Regulator Appeals Case at Supreme Court

Galvin in an administrative action against Robinhood sought to revoke the firm’s broker-dealer license, accusing the firm of failing to protect its customers and their money. As a result of this alleged failure, Galvin accused Robinhood of violating its fiduciary duty rule which raised investment-advice standards for brokers in early 2020.

Furthermore, the Secretary alleged that the commission-free brokerage treated trading as a game and implemented strategies to lure young and inexperienced traders. He further claimed that Robinhood rained down confetti on the phone screen of its traders after the execution of each trade.

However, in March 2022, Judge Michael Ricciuti of the Suffolk County Superior Court in Boston ruled in Robinhood’s favour, arguing that federal stance on the matter overrides the state regulator’s requirements. Ricciuti also judged that Galvin went beyond his authority to implement a regulation that conflicted with the federal laws.

At the time, Finance Magnates reported that the ruling only impacted a part of the Massachusetts securities watchdog’s action against Robinhood as the regulator could still pursue the claims that the brokerage adopted unethical practices and even failed to adequately supervise its employees.

In February, Galvin appealed against the ruling at the Supreme Judicial Court, asking the top Massachusetts court to reverse the lower court’s decision. Oral presentations were then fixed for May 3, 2023 (today).

In the latest on the case, Massachusetts’ supreme court will consider whether to revive the fiduciary rule or not. However, Robinhood’s lawyers are maintaining the lower court’s ruling that Galvin does not have the authority to implement such a rule, Reuters reported.

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