Massachusetts regulators have accused trading app Robinhood of purposefully targeting and manipulating inexperienced traders. 
Alex Veiga and Stan Choe from the AP reported:
Regulators in Massachusetts claim Robinhood Financial targets and manipulates inexperienced investors and has failed to prevent costly outages on its popular stock trading platform.
In an administrative complaint filed Wednesday by Secretary of the Commonwealth William Galvin, the state alleges that Robinhood violated securities laws by aggressively marketing itself to Massachusetts investors “without regard for the best interest of its customers,” while also failing to maintain a properly working platform as its number of users exploded.
CNN’s Matt Egan wrote:
Robinhood used strategies “such as gamification to encourage and entice continuous and repetitive use of its trading application,” the enforcement arm of the Massachusetts Securities Division said, referring to elements of game playing designed to boost user activity.
In a statement, Robinhood said it disagrees with the allegations in the complaint and plans to “vigorously” defend itself. The startup pointed to improvements made to its options offering, additional safeguards and enhanced educational materials.
Khristopher J. Brooks from CBS News noted:
Although Robinhood markets itself as millennials’ gateway to the stock market, the company uses “gaming strategies to manipulate customers” to trade more in order to boost its fees, according to the suit.
“For example, one such advertisement contains a clip of a young adult stating, ‘I’m a broke college student, and investments might help my future tremendously,'” the lawsuit states. “In another example, another young adult says, ‘I didn’t know anything about investing before I started using Robinhood. As soon as I set up my account, I had a free stock, so I immediately was an investor’.”
