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
Where can I sign up! This was completely unethical and goes against everything Robinhood originally was created for. I bought NAKD a wile back because of the companies positive outlook. When Robinhood decided to restrict the trading it harmed me in two ways. The first being, Robinhood’s halting decision made my NAKD investment drop 210%. To make things worse the companies that I wanted in invest in (GME, AMC) could not be completed due to this unethical policy change. Why would Robinhood change the rule to halt a positive investment opportunity is beyond me.
What really gets me is how the SEC is barely saying anything about this when it is their job to be looking into this stock manipulation, because clearly this is what happened by Robinhood’s terrible decision.
This is terrible terrible service specially when they lock you of your stocks I had like 8 of them that wouldn’t let me do a dam thing, Come back LATER? What kind of crap it that? Do to high volumes so basically i got screwed because Rich people blocked us little people? Very very wrong, that’s like going to the bank, and they telling you sorry were closed today? Not acceptable terrible business totally wrong no warning no nothing just gonna lock me out of my stocks?
I had one share of GME and one share of Fitbit and Robinhood gave me my money back and got rid of my shares from both companies please sign me up because I am ready to treat Robinhood ole robbing selves they are living up to their name only thing is that their robbing from the poor to make the rich happy
I’m wondering if I qualify for this or if there is another that would suit my situation better. I bought AMC stock yesterday 1/28 in the morning. Robinhood removed AMC from it’s lists seriously slowing the growth of the stock. Now I trade through Fidelity, however it was Robinhoods actions that unfairly affected the growth of my stock. Do I qualify for this suit, or is their any other that fits better for me?
I would like to join as well, they would not let me buy nokia stock now they froze dogecoin
I wasn’t allowed to buy either Nokia nor Game Stop so I would love to join the claim
Add me
Add me
Whats worse is they let me buy DOGE but refuse to let me sell it. I cant transfer it to another wallet and I cant sell. I understand refusing to sell something but refusing to let me cash out of a position is just theft.
Please add me to the list of affected Robinhood Users. Watching the market and was forced to only be able to sell missing out on another set of shares to buy at the lower price it dipped to.
Also have screen shot of robinhood me that i was only able to sell shares.
Me too I did too, I cant believe Robinhood
Add me I was blocked as well
I hope this is expanded to the other brokers who blocked buying, but permitted sales in order to artificially cause a drop in the stock price to benefit short sellers.