Lawsuit Claims $10B in Losses Due to Robinhood Blocking Trades
Robinhood has been on the news often lately, and not for the right reasons. The company has been accused of misleading customers, and received a $70M fine from FINRA. They also restricted access to account and faced multiple lawsuits.
Now, a consolidated class action lawsuit filed by Robinhood investors claims they lost $10 billion when they couldn’t access their accounts to sell or buy volatile stocks such as GameStop earlier this year.
The Robinhood lawsuit alleges that the financial services company had not implemented adequate risk controls, which resulted in trading restrictions and loss for investors. Robinhood also did not have appropriate cash reserves to meet the margin requirements to support the market activities it was promoting.
“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.
Apex is also accused of negligence in directing retail brokerage customers to temporarily suspend purchases of GameStop, AMC and other stocks, over concerns about capital requirements.