Robinhood Lawsuit 2021: Class Action Filed Against App After Restriction of Gamestop Stock Trades
(FOX TV Digital Team) – Robinhood is facing class-action lawsuits after the company’s response to the surge in trading involving GameStop and AMC, according to Fox Business.
On Thursday, Robinhood and other trading platforms announced they would be restricting those stocks to “liquidate only.”
“We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. We also raised margin requirements for certain securities.,” Robinhood said in a statement.
Reddit users on the forum “wallstreetbets” found a list of companies that were being heavily shorted, or bet against, by investment firms. That list included GameStop, AMC, Nokia, and others.
Since then, they rallied amateurs to invest in those companies, driving the stock prices up and making it impossible for investment firms to profit from their bets.
The stocks immediately found support from amateur investors, but after trading planforms restricted transactions, they are finding support from lawmakers. Rep. Alexandria Ocasio Cortez issued a stern rebuke of the online brokerage on Thursday, calling their decision to block retail investors from trading volatile stocks “unacceptable.”
“We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” Ocasio Cortez tweeted. “As a member of the Financial Services Cmte, I’d support a hearing if necessary.”
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
Sen. Ted Cruz, a Texas Republican who often finds himself firmly in opposition to AOC, chimed in saying he fully agreed.
This story was reported from Atlanta.
