Jonathan Stempel

(Reuters] – Fidelity Brokerage Services was charged Wednesday by Massachusetts’ Securities regulator with inappropriately “rubber-stamping” trade options applications. The practice, said to be “blatantly unethical,” allowed certain ineligible retail investor to trade in meme stock.

Secretary of State William Galvin stated that Fidelity with 30.9 Million retail brokerage accounts, $11.1 Trillion of assets under management (as of September 30,) had a “halfhearted and lackadaisical approach” to investor protection in vetting options and margins trading applications.

Fidelity had no immediate comment.

Fidelity received an administrative complaint. It was part of regulators’ efforts to make sure that investors are aware of the potential risks associated with trading in options. The app makes it simpler to access securities markets via smartphone apps.

Galvin stated that Fidelity’s system allowed investors to submit numerous options trading applications with ever-inflating claims. He also failed to identify bogus claims regarding employment status, financial wealth, and investing experience.

One investor applied for 11 jobs in one week. He also made a sudden title change from Scientist to CEO. After receiving approval, he traded options in memes stocks such as AMC Entertainment (NYSE), BlackBerry (NYSE) and Nokia (NYSE).

Galvin stated that options trading and mobile apps are becoming increasingly popular among younger investors. “Broker-dealers must ensure they maintain the same level of care and attention, and make sure the investors who qualify,” Galvin added.

Massachusetts demands that Fidelity pay a civil penalty, hire an independent compliance advisor and prevent future violations.

Optional trading gives investors the option, but not the obligation, to purchase and sell stock. Investors can trade stocks using margin trading. Margin trading can bring higher returns or lower returns and greater risk than ordinary stock trading.

Robinhood was fined $69.6 millions and restitution by the Financial Industry Regulatory Authority last June. The settlement included a range of claims, such as that Robinhood had approved trading options for thousands of unqualified customers. As a result, the company was made public. Robinhood Markets Inc (NASDAQ: ) one month later.