Massachusetts watchdogs have filed a lawsuit against Robinhood accusing the millennial-focused investment app of "aggressive tactics to attract inexperienced investors," CNBC reports, citing the filling.
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Massachusetts securities regulators say Robinhood is using "gamification strategies to manipulate customers" and often experiences technical issues.
"Robinhood, which earns revenue for trades executed by its customers, gave customers with no investment experience the ability to make a potentially unlimited number of trades, without properly screening them to be approved for options trading," the lawsuit says.
At the same time, a Robinhood spokesman told CNBC the company disagrees with the allegations by the Massachusetts Securities Division and plans "to defend the company vigorously." The spokesman reassured the company already ensured that its systems are available when people need them.
In November iHodl reported that Robinhood is planning to go public as early as the first quarter of 2021. However, valued at $11.2 billion, Robinhood's plans still might change. The company already contacted several banks to pitch for roles in an IPO.
In September 2020, the millennials' favorite investing platform raised an additional $460 million in a Series G funding round with a total valuation of $11.7 billion. The company's spokeswoman said the investments came from new and existing investors in Robinhood, including Andreessen Horowitz, D1 Capital Partners, DST Global and others.
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