Robinhood to SEC: Gamification? It’s free speech!

"Robinhood seems intent on throwing as many possible arguments as possible," law professor Stephen Diamond said.

A photo-illustration of Robinhood CEO Vlad Tenev with red tape over his mouth.

Robinhood CEO Vlad Tenev's company says the First Amendment limits the SEC's ability to regulate the way it engages with users.

Photoillustration: Getty Images; Protocol

Accused of turning stock investing into a dangerous game, Robinhood is fighting back by invoking a basic constitutional right: free speech.

Robinhood cited the First Amendment to defend the way the online brokerage communicates and engages with its users as a response earlier this month to an inquiry from the SEC into the way brokerages engage with customers. "The First Amendment strictly limits the SEC's ability to regulate digital engagement practices based on their communicative content," David Dusseault, chief operating officer and president of Robinhood Financial said in an Oct. 1 letter to the SEC provided to Protocol.

The letter underlines what appears to be a key component of Robinhood's legal game plan, which echoes past debates over SEC rules on what public companies and investors are allowed to tell customers and the public. But some analysts argue that Robinhood's use of the First Amendment is flawed -- and even a bit of a head-scratcher.

"This is a stretch in their comment letter," Bruce Weber, dean of the Lerner College of Business and Economics at the University of Delaware, told Protocol, pointing to the statement arguing that the First Amendment limits the SEC's ability to regulate digital engagement practices.

Robinhood's letter was in response to the SEC's call for "information and comment" on the "digital engagement practices" of stock brokers and dealers, including "behavioral prompts, differential marketing, [and] game-like features," which the agency noted was "commonly referred to as gamification."

SEC Chair Gary Gensler said the agency plans to focus on features that "may encourage investors to trade more often, invest in different products, or change their investment strategy" and the use of tools meant to "increase revenues, data collection, or customer time spent on the platform."

The SEC request did not mention Robinhood specifically. But the company has long been portrayed as the poster child for gamification.

Last year, the company was sued by the Commonwealth of Massachusetts, which accused Robinhood of unlawfulness due to its "aggressive tactics to attract inexperienced investors, its use of gamification strategies to manipulate customers, and its failure to prevent frequent outages and disruptions on its trading platform." These charges became magnified in January during the GameStop trading frenzy, which led to congressional hearings into Robinhood's business model.

Robinhood denied those claims, and argued in its letter to the SEC that platform features "are designed to promote financial literacy and investment awareness and to provide customers with information they need and want in order to make informed and self-directed decisions about their future investment goals and needs."

"Just as a painting or a symphony is entitled to no less First Amendment protection than a novel or a newspaper article, digital platforms do not lose First Amendment protection when they express ideas through 'animation and graphics' or 'visual cues,'" Dusseault wrote.

These features, he argued, are "ubiquitous on today's e-commerce and other digital platforms" and they are based on Robinhood's mission to make stock market investing "not an activity reserved for the wealthy, but one that should be broadly accessible to the masses."

University of Chicago law professor Todd Henderson said that critics like the SEC essentially believe that the "digital engagement" tools used by companies like Robinhood "lead to bad choices by individual investors."

Robinhood's free speech counterargument also comes across as misleading, said Santa Clara University law professor Stephen Diamond, who argued that the company is "attempting to recharacterize the SEC inquiry as an intrusion on speech."

"The SEC release refers to 'practices,' which is not, of course, speech but, well, a practice," he told Protocol. "It seems clear the SEC is understandably concerned about a set of new practices that are luring thousands of often inexperienced and young investors into the securities markets. That's clearly in the strike zone."

Weber of the University of Delaware said the SEC request is "reasonable" and "not broad," and "seems appropriate in the context of investment advice."

Robinhood declined further comment. The company's 37-page response was striking, and appeared to underscore how the company sees the SEC probe as a serious threat to its business, analysts said.

"The length of their letter is unusual," Diamond told Protocol. "They also seem to be getting way ahead of the process. It is not clear how the SEC intends to regulate, if they do regulate. But Robinhood seems intent on throwing as many possible arguments at this effort as possible, perhaps in the hope — likely in vain — that this will discourage the SEC."

Henderson echoed that view, noting that the SEC "just sent this open inquiry and hasn't even issued a rule yet." It's also typically considered a bad idea for regulated companies to take on what appears to be a combative posture toward the SEC, according to analysts.

But Robinhood's letter also suggests that the SEC probe has spooked the company.

"These issues of digital engagement are absolutely essential to their business," Henderson said. "It could be existential for them. That means you're more likely to see them be aggressive, whether that means aggressive court challenge or just aggressively fighting the rules."

Robinhood also needs to worry about possible SEC action on a major revenue stream: rebates earned for sending trade orders to market makers, also known as payment for order flow. Gensler has strongly suggested the SEC could ban it.

"They are likely fighting on both fronts," Diamond said. "Perhaps they have a profitable business without payment for order flow, but if they have to give up digital engagement practices, then they don't look any different than TD Ameritrade or any other broker with a website."


The minerals we need to save the planet are getting way too expensive

Supply chain problems and rising demand have sent prices spiraling upward for the minerals and metals essential for the clean energy transition.

Critical mineral prices have exploded over the past year.

Photo: Andrey Rudakov/Bloomberg via Getty Images

The newest source of the alarm bells echoing throughout the renewables industry? Spiking critical mineral and metal prices.

According to a new report from the International Energy Agency, a maelstrom of rising demand and tattered supply chains have caused prices for the materials needed for clean energy technologies to soar in the last year. And this increase has only accelerated since 2022 began.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (

Sponsored Content

Why the digital transformation of industries is creating a more sustainable future

Qualcomm’s chief sustainability officer Angela Baker on how companies can view going “digital” as a way not only toward growth, as laid out in a recent report, but also toward establishing and meeting environmental, social and governance goals.

Three letters dominate business practice at present: ESG, or environmental, social and governance goals. The number of mentions of the environment in financial earnings has doubled in the last five years, according to GlobalData: 600,000 companies mentioned the term in their annual or quarterly results last year.

But meeting those ESG goals can be a challenge — one that businesses can’t and shouldn’t take lightly. Ahead of an exclusive fireside chat at Davos, Angela Baker, chief sustainability officer at Qualcomm, sat down with Protocol to speak about how best to achieve those targets and how Qualcomm thinks about its own sustainability strategy, net zero commitment, other ESG targets and more.

Keep Reading Show less
Chris Stokel-Walker

Chris Stokel-Walker is a freelance technology and culture journalist and author of "YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars." His work has been published in The New York Times, The Guardian and Wired.


The 911 system is outdated. Updating it to the cloud is risky.

Unlike tech companies, emergency services departments can’t afford to make mistakes when migrating to the cloud. Integrating new software in an industry where there’s no margin for error is risky, and sometimes deadly.

In an industry where seconds can mean the difference between life and death, many public safety departments are hesitant to take risks on new cloud-based technologies.

Illustration: Christopher T. Fong/Protocol

Dialing 911 could be the most important phone call you will ever make. But what happens when the software that’s supposed to deliver that call fails you? It may seem simple, but the technology behind a call for help is complicated, and when it fails, deadly.

The infrastructure supporting emergency contact centers is one of the most critical assets for any city, town or local government. But just as the pandemic exposed the creaky tech infrastructure that runs local governments, in many cases the technology in those call centers is outdated and hasn’t been touched for decades.

Keep Reading Show less
Aisha Counts

Aisha Counts (@aishacounts) is a reporter at Protocol covering enterprise software. Formerly, she was a management consultant for EY. She's based in Los Angeles and can be reached at


'The Wilds' is a must-watch guilty pleasure and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Our favorite things this week.

Illustration: Protocol

The East Coast is getting a little preview of summer this weekend. If you want to stay indoors and beat the heat, we have a few suggestions this week to keep you entertained, like a new season of Amazon Prime’s guilty-pleasure show, “The Wilds,” a new game from Horizon Worlds that’s fun for everyone and a sneak peek from Adam Mosseri into what Instagram is thinking about Web3.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.


Work expands to fill the time – but only if you let it

The former Todoist productivity expert drops time-blocking tips, lofi beats playlists for concentrating and other knowledge bombs.

“I do hope the productivity space as a whole is more intentional about pushing narratives that are about life versus just work.”

Photo: Courtesy of Fadeke Adegbuyi

Fadeke Adegbuyi knows how to dole out productivity advice. When she was a marketing manager at Doist, she taught users via blogs and newsletters about how to better organize their lives. Doist, the company behind to-do-list app Todoist and messaging app Twist, has pushed remote and asynchronous work for years. Adegbuyi’s job was to translate these ideas to the masses.

“We were thinking about asynchronous communication from a work point of view, of like: What is most effective for doing ambitious and awesome work, and also, what is most advantageous for living a life that feels balanced?” Adegbuyi said.

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at

Latest Stories