According to online traders and more than 30 civil complaints, the Robinhood trading app manipulated the stock market and deprived its users of major wins when it suspended the trading of certain stocks. One man filed a class-action lawsuit against Robinhood, and several others followed in his footsteps.
Now, as of February 2, 2021, Robinhood is facing a total of 34 civil complaints, many of which are class-action lawsuits.
The stock market drama began when a group of retail investors gathered on a Reddit forum – r/wallstreetbets – and began mass purchasing stocks Forbes describes as “fundamentally hated” by hedge funds. By purchasing these undervalued stocks, online traders drove the share prices up and created a “short squeeze” for big investors who bet against certain companies.
Redditors began with GameStop, increasing the share price 8 times from $43 to $347 and causing major losses for hedge funds like Melvin Capital. They then moved onto stocks like AMC, BlackBerry, and Nokia. The unexpected moves from retail investors caused concern among institutional investors; and worries about “market volatility” led Robinhood and other online brokerage platforms to curb or suspend the trade of popular stocks.
As a result, stocks fell back down and Robinhood investors lost money, as well as faith in an app that promised to “democratize finance for all.” GameStop stock plummeted from $227 to $93 on the morning of February 2, and AMC stock dropped by almost 50%.
The first person to file suit against Robinhood issued a class-action complaint in the U.S. District Court for the Southern District of New York on January 28, 2021. He alleges that “Robinhood’s actions were undertaken ‘purposefully and knowingly to manipulate the market’ for individuals and financial institutions who are not the platform’s users,” thus violating the company’s Customer Agreement, fiduciary duties, and the implied covenant of good faith and fair dealing.
In a second lawsuit, the plaintiff claims that Robinhood’s decision to halt stocks like Blackberry, Nokia, and AMC was designed to “protect institutional investment at the detriment of retail customers” and prevents investors from getting the fair market value for their investments, thus causing irreparable harm.
Robinhood’s actions have garnered bipartisan concern from lawmakers and politicians, and hundreds of people have expressed interest in joining a class-action lawsuit against the company.
How Do I Join the Clas-Action Lawsuit Against Robinhood?
Because there are upwards of 30 lawsuits against Robinhood, you will need to speak to an attorney to join the appropriate class-action lawsuit and maximize your potential recovery. As legal action against Robinhood continues to unfold, you can trust MR Civil Justice to keep you informed and help you understand your legal options.
Please visit our page on Robinhood Class Action Lawsuits and call at (214) 739-0100 with your case-specific questions.
Our attorneys are tried and true civil justice warriors, and we are ready to fight for your rights, starting with a free case review.
Call us or contact us online to schedule yours today.