A former commissioner of the Securities and Exchange Commission who now works for zero-commission brokerage Robinhood believes that the regulator’s focus on issues that continuously put the firm in the headlines over the past year-and-a-half is laughable, according to news reports.

"When I hear discussions about this rulemaking and it being related to January 28th [2021], it kind of makes me laugh," Dan Gallagher, who currently serves as chief legal officer at Robinhood, said in a video interview with Paul Hastings lawyers, posted last week, according to FA-IQ sister publication Ignites.

"You hear these other, you know, quite frankly, I think, silly ideas of ‘gamification of brokerage apps caused this’ or ‘the market structure and market makers and lack of competition caused this payment for order flow,’ and it’s just garbage, guys, it’s not true,” Gallagher added, according to the publication.

Robinhood’s use of gamification tactics — which included the ubiquitous digital confetti sprayed on a user’s screen following a trade execution — first became a cause of regulatory action not by the SEC but by Massachusetts Secretary of the Commonwealth William Galvin. In December 2020, the watchdog accused the brokerage of using such tactics to manipulate customers into “luring young and inexperienced customers to make more and more trades.”

The Financial Industry Regulatory Authority, meanwhile, warned in February 2021 that firms which rely on app-based platforms designed with “game-like” elements designed to influence customers to trade must consider how they address and disclose the potential risks.

Gensler first said that the SEC was considering new rules for trading apps using gamification tactics in the third round of hearings at the U.S. House Committee on Financial Services, held in May 2021, on the market frenzy in so-called “meme stocks” such as GameStop in January that year.

And Robinhood chief executive Vlad Tenev had been grilled by lawmakers on the same committee in February — about three months before Gensler’s hint that the SEC could look into gamification — about Robinhood’s reliance on orders for order flow.

It wasn’t until last month that Gensler proposed a major overhaul of the equities market and the role played in it by payments for order flow.

Gallagher served as an SEC commissioner from November 2011 to October 2015 and went into private practice immediately after, joining Robinhood as its chief legal officer in May 2020, according to his LinkedIn profile.

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