The Sheriff Wants a Word With Robinhood

Massachusetts regulator William Galvin says the free app is encouraging novice investors to trade themselves into trouble

- Pat Regnier

William Galvin is as old school as they come, even for a state securities regulator. Galvin, 70, drives an Impala, uses a flip phone, and leaves the emailing and tweeting to his staff. But he may turn out to be the worst nightmare of Robinhood Markets, the company whose zero-commission brokerage app captivates millennial and Gen Z investors.

Galvin is the secretary of the Commonwealth of Massachusetts, a position he’s held since 1995, when the founders of Robinhood were still in grade school. In that time, Galvin turned the office that oversees elections, historic preservation, and record-keeping into a financial regulator that’s sometimes ahead of its national counterparts. He’s won penalties from such Wall Street giants as Morgan Stanley and Goldman Sachs, as well as local icons like the mutual fund manager Putnam Investments.

In December his office sued Robinhood, alleging that the trading platform violated state law by emphasizing the addictive thrills of trading over helping novice investors learn how to make sound investment decisions. He says the company’s brightly designed smartphone app is promoting the “gamification” of investing with features such as animated confetti when users make their first transaction and promotions giving away free stock for signing up or referring friends.