Name: Robinhood hit with class-action lawsuit after restricting GameStop stock
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Robinhood hit with class-action lawsuit after restricting GameStop stock

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The online stock trading app Robinhood was hit with a class-action lawsuit Thursday by a trader upset the company restricted amid a market feeding frenzy involving small-time investors inspired by a Reddit web forum.In the Manhattan federal court suit, Massachusetts resident Brendon Nelson claimed the app blocked users from its service by pulling the shopping mall video game store’s stock — which was sent skyrocketing in value over the past few days — from its trading.“On or about January 27, 2021 Robinhood, in order to slow the growth of GME deprived their customers of the ability to use their service, abruptly, purposefully, willfully, and knowingly pulled GME from their app,” the suit states.“Meaning, retail investors could no longer buy or even search for GME on Robinhood’s app,” it adds.Nelson filed the suit on behalf of all Robinhood users in the US and is asking a federal judge to require the app to immediately reinstate the stock to the trading platform.The suit alleges the app violated a rule from the Financial Industry Regulatory Authority, which states apps like Robinhood “must make every effort to execute a marketable customer order that it receives promptly and fully.”By pulling the GameStop stock — and several other similar stocks — the app has blocked users from earning gains by buying the stock and profiting from potentially shorting it, the suit alleges.“In sum, Robinhood has completely blocked retailer investors from purchasing GME for no legitimate reason, thereby depriving retailer investors from the benefits of Robinhood’s services,” the suit states.In , the app said it was restricting trading for several stocks “in light of recent volatility.”Robinhood users, /r/wallstreetbets, have skyrocketed the price of several cheap stocks like GameStop by buying it in bulk after learning hedge funds were “shorting” the stock, or betting on it to fail.In a separate federal suit filed in Chicago, an Illinois resident named Richard Gatz claimed the app caused him irreparable harm because it pulled stocks for Blackberry, Nokia and AMC Theaters, which were also boosted by the Reddit forum.“The value of these options decreased by almost two-hundred percent and the [Blackberry] stock price fell over ten dollars ($10) from the prior days close,” the suit states.Gatz further claims that the halting of trade was done to protect “institutional” investors — like hedge funds — and to hurt individual “retail” investors.“On information and belief, the halting of trading of these stocks was to protect institutional investment at the detriment of retail customers. Furthermore, this appears to be in lock-step with other securities trading platforms, such as Ally Financial, TD Ameritrade and potentially others,” the suit states.Gatz is also requesting the stocks be added back onto the trading app.

The online stock trading app Robinhood was hit with a class-action lawsuit Thursday by a trader upset the company restricted amid a market feeding frenzy involving small-time investors inspired by a Reddit web forum.In the Manhattan federal court suit, Massachusetts resident Brendon Nelson claimed the app blocked users from its service by pulling the shopping mall video game store’s stock — which was sent skyrocketing in value over the past few days — from its trading.“On or about January 27, 2021 Robinhood, in order to slow the growth of GME deprived their customers of the ability to use...

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Robinhood hit with class-action lawsuit after restricting GameStop stock

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