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Robinhood, an online finance app used for stock trading, on Thursday blocked its users from trading stock in GameStop after shares for the troubled video game retailers skyrocketed in value. Now the folks that were trading the stock and pushing it to wild heights have served Robinhood with a class action lawsuit.
GameStock and other stocks have been spiking recently because of the influence of day traders that are sharing messages on Reddit, an online message board. Members of a Reddit page called the Wall Street Bets were deliberately pushing prices of these troubled companies higher in order to harm the positions of some professional investors that were “short selling” the stock, or betting that the companies would fail and pocketing the profit. The Reddit members’ actions took investment experts off guard.
Robinhood and other trading apps and exchanges noticed the volatility and suspended or blocked trades. Robinhood reportedly removed the GameStop stock from its platform.
“Robinhood purposefully, willfully, and knowingly removing the stock ‘GME’ from its trading platform in the midst of an unprecedented stock thereby deprived retail investors,” states the complaint.
The Robinhood class action lawsuit over the GameStop stock removal was reportedly filed by plaintiff Brendan Nelson in the southern district of New York and seeks to represent all Robinhood investors, according to Investor Place.
Robinhood Class Action Allegations
According to the complaint, Robinhood appeals to new and younger investors. In 2016, it launched with the tweet “Let the people trade,” notes the plaintiff. However, with this most recent move to restrict its investors from GameStop stock, it has allegedly disregarded this mantra.
The complaint describes the GameStop stock phenomenon, noting that the price began to rise on Jan. 11, 2021. At that time, Robinhood allowed those using its platform to trade GME stock.
“On or about January 27, 2021 Robinhood, in order to slow the growth of GME and deprived their customers of the ability to use their service, abruptly, purposefully, willfully, and knowingly pulled GME from their app,” alleges the plaintiff. “Meaning, retail investors could no longer buy or even search for GME on Robinhood’s app.”
Plaintiff Nelson says that he personally tried to search for GameStop stock on Jan. 28. He says he could not even get the stock to appear, despite GME being publicly traded and available on other platforms.
Nelson says that he and other investors who use the Robinhood app lost out on GameStock earning opportunities. The class action lawsuit contends that Robinhood failed to act in the interests of its own customers.
“Robinhood’s actions were done purposefully and knowingly to manipulate the market for the benefit of people and financial intuitions who were not Robinhood’s customers,” alleges the complaint.
The class action lawsuit further alleges that GameStop is not the only stock that Robinhood has restricted from its users.
“Robinhood continues to randomly pull other securities from its app for no legitimate reason,” contends the complaint.
Nelson is seeking an immediate court order that would require Robinhood to reinstate GME on its app, along with damages on behalf of himself and his proposed Class. The class action lawsuit accuses Robinhood of breach of contract, breach of good faith and fair dealing, negligence, and breach of fiduciary duty.
Users Outraged Over Removal
Those who use the Robinhood investment app, as well as others, expressed dismay over the firm’s move, which some see as high-handed.
In response to the news that Robinhood removed GME from its platform, Representative Alexandria Ocasio-Cortez reportedly tweeted that “This is unacceptable. We now need to know more about [Robinhood’s] decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services [Committee], I’d support a hearing if necessary.”
Texas Senator Ted Cruz reportedly tweeted, “I agree,” in response, according to Vice.
Top Class Actions will update this breaking news story as it develops. Click on the “Follow Article” button at the top of this page to get the latest updates on the Robinhood class action lawsuit by using your free Top Class Actions account.
Did you try to buy GameStop stock on the Robinhood app? We want to hear from you! Tell us what happened in the comment section below.
The lead plaintiff is represented by Alexander G. Cabeceiras, Esq.
The Robinhood GameStock Class Action Lawsuit is Nelson v. Robinhood Financial LLC, et al., Case No. 1:21-cv-00777, in the U.S. District Court Southern District of New York.
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171 thoughts onGameStop Traders Hit Robinhood with Class Action for Stopping Trades
How can I join. They do this with most stocks that are spiking. Not right at all
I was scheduled to buy GameStop stock. The next morning I logged in to Robinhood and had a message that read transaction cancelled by user. I didn’t cancel my order Robinhood did.
please ad me and husband we can’t believe this happened. I jumped on board with Robin hood a few years prior just because u wasn’t happy with the way my portfolio was be handle by the bug corporate guys.
yes also same thing with amc
i had a partial stock and tried to purchase more and yes there was no option other than sell ,i tried a few times got frustrated and sold . i am a single mother who was excited and in disbelief i picked a good stock but then wasnt able to purchase morr
add me
I was blocked from purchasing please add me.
Please Add Me … RobinHood only allowed me to purchase AMC when They Wanted to … Same with DogeCoin !!