Massachusetts’ securities regulator is reportedly investigating Robinhood’s newly launched prediction-markets hub.
Secretary of State Invoice Galvin advised Reuters on Monday (March 24) that his workplace despatched a subpoena to Robinhood looking for copies of the corporate’s advertising supplies and details about how lots of the firm’s brokerage account customers within the state have requested to commerce school sports activities occasions contracts.
“That is simply one other gimmick from an organization that’s superb at gimmicks to lure buyers away from sound investing,” Galvin advised Reuters, talking of Robinhood’s prediction-markets hub.
The rising reputation of occasion contracts has drawn criticism from some who liken them to playing, in response to the report.
Galvin advised Reuters, per the report, that he’s involved about linking an occasion that’s well-liked with younger folks to a brokerage account.
A Robinhood spokesperson stated in an announcement supplied to Reuters that the occasions contracts it gives are regulated by the Commodity Futures Buying and selling Fee and provided via CFTC-registered entities.
“Prediction markets have develop into more and more related for retail and institutional buyers alike, and we’re proud to be one of many first platforms to supply these merchandise to retail prospects in a secure and controlled method,” the assertion stated.
Robinhood introduced March 17 that it added a prediction markets hub to its app, permitting customers to commerce on the outcomes of occasions.
The corporate stated on the time in a press launch that the primary contracts, which began rolling out that day, lined what the higher certain of the goal Fed funds fee could be in Might and who would win the lads’s and girls’s school basketball tournaments.
“We’re excited to supply our prospects a brand new approach to take part within the prediction markets and stay up for doing so in compliance with current laws,” JB Mackenzie, vp and normal supervisor of futures and worldwide at Robinhood, stated within the launch.
In an earlier, separate case, Galvin stated in January 2024 press launch that Robinhood agreed to pay a $7.5 million high-quality and overhaul its digital engagement practices to settle a 2020 case he introduced that accused the corporate of utilizing gamification methods to “appeal to and manipulate” prospects.
The settlement additionally addressed points having to do with a 2021 knowledge breach, Galvin stated within the Jan. 18, 2024, launch.