The Massachusetts Supreme Judiciary Court docket (the state’s highest court docket) Friday reversed a decrease court docket’s resolution that had present in favor of digital brokerage Robinhood.
The choice is monumental, not just for the enforcement motion towards the behemoth on-line dealer in 2020, however as a brand new precedent in Massachusetts, one which seemingly now holds all broker-dealers, on-line or not, to the identical fiduciary normal of funding advisors.
Justice Dalila Wendlandt, who wrote the opinion for the court docket’s Friday 5-0 ruling, mentioned that the court docket discovered Secretary of the Commonwealth William F. Galvin, had not overstepped his authority in holding Robinhood to a fiduciary obligation within the enforcement motion.
“In contrast to the fabled ‘Prince of Thieves,’ who took from the wealthy to provide to the poor, the plaintiff Robinhood Monetary LLC (Robinhood), is accused by the Secretary of the Commonwealth (Secretary) of benefiting from unsophisticated buyers to fill its personal coffers by allotting ill-suited funding recommendation to those prospects and by encouraging them to have interaction in dangerous buying and selling practices utilizing its on-line buying and selling platform,” she wrote within the opening sentence of the opinion.
On web page 23 of the 47-page opinion, Wendlandt discusses the “expansive authority” that the Secretary of the Commonwealth and its Securities Division has in defending buyers within the state beneath the Massachusetts Uniform Safety Act and that authority prolonged “to guard buyers confused by the more and more blurred line between broker-dealers offering funding recommendation and funding advisers.”