ROBINHOOD CLASS ACTION LAWSUIT
Texas Attorneys File Class-Action Lawsuit Against Robinhood Over GameStop Shares
The experienced class action lawyers at Reich & Binstock have filed a class-action lawsuit in Texas against the trading app, Robinhood for preventing its members from trading GameStop shares on January 28, 2021.
Negligent choices are more serious given Robinhood’s history of similar breakdowns.
Why is There a Class Action Lawsuit Against Robinhood Trading App?
Robinhood Trading App made the decision to deny its customers access to the marketplace--the same app that profited off of those very customers who were lured in under the guise of fair market participation.
Shares for GameStop closed at an all-time high on January 27, 2021. However, when the market opened the next day, Robinhood Trading App shut down trading of the stock to its over 10 million customers, citing volatility, while other broker-dealers continued to execute trade orders.
When Robinhood shut down transactions, GameStop was trading for around $445 per share. But, before hours on January 28, shares of GameStop started dropping, falling as low as $263 per share.
When the market opened, GameStop then rose from $263 to a peak of $483 per share within 30 minutes. Robinhood customers could not move their shares, whatsoever.
Robinhood's immediate restrictions go against their company principles which are promoted to customers through it's own marketing materials and contract agreements. The trading app breached its obligations and negligently chose to deny its customers marketplace participation--at the expense of its customers
Is It Legal for Robinhood to Restrict Trading?
Robinhood Trading App purposely and knowingly manipulated the market for the benefit of financial institutions who were not Robinhood customers. Although in Robinhood's terms, it does state that they can block trades at any time. Whether or not brokerages should exercise that power given the current circumstances is up for a legitimate legal debate.
How Do I Join the Class Action Lawsuit Against Robinhood?
What Stocks are Restricted on Robinhood?
As of February 1, 2021, Robinhood has reduced its trading restrictions from 50 to 8. The companies on the current list include: GameStop, AMC Entertainment, BlackBerry, Express, Genius Brands International, Koss Corp, Naked Brand Group, and Nokia.
If a user already holds more shares or contracts than the allocation by Robinhood, their position will not be sold or closed. According to Robinhood, "You will not be able to open more positions of each of these new securities unless you sell enough of your holdings such that you are below the respective limit."