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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
Add me to the lust against RH. I also have screen shots.
RH’s manipulation of the markets affected my profits on stocks I owned. By stopping others from buying, they harmed stock I owned, as well as influenced the purchases of others. If this were done by anyone other than RH, it would have been immediately condemned by the SEC. Instead they are silent. RH needs to be made an example of.
YES I tried to buy GameStop stock but a notice came up preventing me from buying. I had a stock in AMC but tried to increase and the same notice came up. Didn’t understand what happened until I saw it on the news that this was done ON PURPOSE! I sold the one I had and didn’t try again after I went back a few times to see if the restrictions were lifted. Disappointed!
Extremely pissed off at robinhood. They prevented me to increase my level of investment in amc and also from purchasing gme stock. They also prevented buying more doge coin. I was forced to sell my amc stocks because it said that robinhood doesn’t support that stock yesterday.
I am not a Robinhood user, however, I bought into the GME stock as a pattern trade. When Robinhood prevented or strictly limited the purchase of the GME stock, they suppressed the market, which had a negative impact on my trades.
While I understand that purchasing stocks is inherently risky, the negative impact on my purchases was due to malicious market manipulation, not natural market volatility.
Is this class action law suite only open to users of Robin Hood who could not trade? Or is it open to others impacted by their actions?
Webull too
I am very upset. I downloaded Robinhood due to their mission statement only to find out everything about the app represents falsehood. I attempted to buy a stock, only to have it immediately rejected after a hold that was already placed by the app at buy in. Both should not have occurred. I calculated a major loss. As an investor, I do not find the app very appealing.
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
They won’t allow me to buy fractions anymore or set my AMC limits to sale. I can’t do anything with dogecoin! This is trash!! Add me
I went to buy GameStop stock and could not. Robinhood pulled it. We could not buy it. Very disappointed. Could have made money. Was going to invest. The middle class try to make money in stocks like the wealthy and we get blocked. The rich control the market and this is not right.