Online brokerage Robinhood Markets Inc has cut its annual margin interest rate for premium customers in half to 2.5%, the company said on Monday, making it one of the cheapest in the sector.
The rate cut is part of the company’s overall goal to lower the cost of investing, Robinhood said in a statement, and is the latest competitive move by the popular trading app.
Robinhood in a statement said it disagreed with the allegations and will defend itself.
“We review factors like investment objectives, experience, and risk tolerance to determine eligibility,” said Madhu Muthukumar, Robinhood’s head of product management.
Founded in 2013, Robinhood has been credited with helping usher commission-free trading throughout the retail brokerage industry.
Massachusetts Secretary of the Commonwealth William Galvin, the state’s top securities regulator, in an administrative complaint on Wednesday alleged that Robinhood marketed itself to investors without regard for the best interest of its customers.
The complaint alleged that Robinhood used the promise of free stock trades to attract new users and strategies such as “Gamification” to entice repeated use of its app.