Robinhood Lawsuit Overview:
- Who: Investors in Robinhood have a newly consolidated class action against Robinhood for losing $10 billion of investors’ money
- Why: 55 lawsuits filed in a multidistrict litigation against Robinhood are suing for breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and negligence.
- Where: Multidistrict litigation combined the lawsuits in Florida
Robinhood lost investors $10 billion by cutting off their access to volatile stocks such as GameStop earlier this year, a newly consolidated class action lawsuit filed by investors claims.
The Robinhood lawsuit alleges that the financial services company had not capitalized its business or implemented adequate risk controls, which resulted in trading restrictions and loss for investors, and the investors call the company a “true amateur among institutional brokers,” Law360 reports.
The Robinhood class action is one of 55 lawsuits being filed in a multidistrict litigation against the stock-trading app that includes a group of claims against Robinhood and other brokers, and another group of antitrust claims alleging an anti-competitive scheme to restrict investors’ access to the stock market.
The US Judicial Panel on Multidistrict Litigation centralized the cases in Florida in May.
According to the first consolidated complaints in the class action lawsuit, Robinhood did not have appropriate cash reserves to meet the margin requirements to support the market activities it was promoting, namely trading of popular “hot stocks” like GameStop, Law360 reports.
“By imposing restrictions on only one side of the transaction — the buy side — and depriving plaintiffs and other members of the class of the ability to purchase the suspended stocks, the majority of which were traded on its platform, while allowing selling to continue, Robinhood artificially depressed prices of the suspended stocks,” the investors allege in the claim.
Natalia Salas, who is among the attorneys for the lead plaintiffs, told Law360 that the startup mentality of ‘move fast and break things’ had spawned incredible innovation in the last decade, but “what Robinhood failed to appreciate is that that mentality is wholly inappropriate when the thing you are breaking is the stock market.”
Other online trading platforms are named in the individual claims. However, Robinhood — which expected to go public later this year in an estimated $35 billion IPO – is the only platform named in almost all the claims. The majority of the lawsuits are suing for breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and negligence.
Did you trade GameStop stock earlier this year? Do you use or invest in Robinhood? Tell us about your experience in the comments section below.
The investors are represented by Natalia M. Salas, James L. Ferraro, James Ferraro Jr., Bruce S. Rogow, Sean A. Burstyn and Daniel J. DiMatteo of The Ferraro Law Firm PA, Peter Safirstein of Safirstein Metcalf LLP, Joseph R. Saveri, Steven N. Williams, Christopher K.L. Young and Anupama K. Reddy of Joseph Saveri Law Firm and Frank R. Schirripa, Kathryn Hettler, Seth Pavsner and Eugene Zaydfudim of Hach Rose Schirripa & Cheverie LLP.
Robinhood is represented by Andrew D. Huynh, Antony L. Ryan, Brittany L. Sukiennik and Kevin J. Orsini of Cravath Swaine & Moore LLP, Benjamin H. Diessel and John H. Doroghazi of Wiggin and Dana LLP, Carl Brandon Wisoff and Eric D. Monek Anderson of Farella Braun & Martel, Craig C. Reilly of Law Office of Craig C. Reilly, Craig Steven Rutenberg and Naeun Rim of Manatt Phelps & Phillips LLP, Dennis P. Waggoner and Joshua C. Webb of Hill Ward Henderson, Elizabeth Robben Murray and Kevin A. Crass of Friday Eldredge & Clark LLP, Grace Kang of Bird Marella Boxer Wolpert Nessim Drooks Lincenberg & Rhow PC, Gustavo J. Membiela, Maria Castellanos Alvarado and Samuel A. Danon of Hunton Andrews Kurth LLP and Odean L. Volker of Haynes and Boone LLP.
The Robinhood Investor Loss MDL is In re: January 2021 Short Squeeze Trading Litigation, Case No. 1:21-md-02989, in the U.S. District Court for the Southern District of Florida.
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435 thoughts onRobinhood Lost Investors $10B By Blocking Trade, Alleges Class Action Lawsuit
Please add me
Add me
Add me, blocked my trades.
Add me please. I use robinhood
Please ad me
Please add me
Game Stop was blocked, please add me
I have a cash account with them and I was still denied buying shares, but they were willing to take what I owned off my hands.
Overall I hope there’s more than a class-action lawsuit against all the Wall street thieves not just Robinhood.
I currently trade with Robinhood and have been for a while, my Game Stop trades were blocked. I missed out on money. Please add me to the lawsuit.
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