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
I use Robinhood and was affected been getting apology emails please add me
Please add me, I was affected for many stocks.
I didn’t buy GameStop, but AMC stocks were Treated exactly the same way. They halted the ability to buy, and only gave us the ability to sell. I definitely would like to be part of this class action lawsuit because it does not only affect GameStop, it affects many other stocks At the same time.
True for AMC and SNDL. Was unable to buy more. And was unable to get out at a certain price.
Add me
When trying to purchase stocks on robinhood, I was restricted from doing so due to high “volatility” which is illegal. Prevented me from being able to get the stocks I wanted, and when stocks opened they decided to limit my purchase to 1. This has happened to millions of people, and we all lost a absurd amount of profits. This is damaging to the people, their customers. I believe robinhood was sued not long ago for selling stocks without notifying the stock owner. Robinhood should be sued on behalf of everyone who was restricted. 1 million settlement to each of the American people that they restricted, participated with the hedge funds to manipulate the system. No way this is going without a fight. American people, all traders have been taken advantage of in our markets. We deserve fair markets and they’ve been manipulated for years. Robinhood showed us they are not for the traders, but for the hedge funds. Illegal activity all around in this market. Every trader needs payment for losses and damages. And no $600 payments won’t cover our losses. Leave them with $600…
I can’t say everything here but because of Robinhoods actions and changing the rules in the middle of the game without notice along with there hedge fund buddies I’ve lost a total of at least $65,000 so far as of today. Their CEO went on CNBC and Specifically said “IT IS NOT A LIQUIDITY PROBLEM” Thats a years salary for me and they need to pay back every penny. And what do I do now? Do I sell and take the loss and miss out on the stock going higher so I can make back that money? I’m absolutely furious and I really have felt like ending it all seeing my hardwork and money disappear because of Robinhood and their negligent and intentional actions to crater the stock to allow their buddies who were shorting the stock to get out at a lower price. The stock was nonstop climbing until the moment they did that. I have 2 other platforms I invest on and what they did had the same effect across the board because almost 100% of my portfolio was these shorted stocks that they destroyed with their actions.
I also was robbed tried buying gme, amc and doge coin all which were suddenly restricted from buying. I could’ve bought low and sold hi or held my position but Robinhood robbed me of that chance of profit …
How do I get involved? I placed a premarket buy for $5,127.00 and it was canceled at opening. Shares never purchased. Other stocks invested in AMC and BB were sell only. Was not allowed to place order. Now transitions to ameritrade while holding in Robinhood stock limits placed. They are robbing their customers. There job is to provide a service to me and they have failed me and many others.
I bought couple contracts and shares in BB, NOK, BBBY, GME, and NAKD on Wednesday, Thursday Robinhood decided to restrict people from buying these stocks and selling was the only option given. I lost $6,000 because of this restriction placed. Please add me to the class action lawsuit.
Add me, definitely what they did was completely illegal and essentially stopped the market from happening naturally and hurt many people.