Dozens of lawsuits have reportedly been filed against stock-trading and investing app, Robinhood, following its decision to restrict several stocks that enjoy a popularity on the r/WallStreetBets subreddit. The organization has been sued in the federal court by at least 30 parties spread across 10 states, with many asking for class action status, cite sources with knowledge of the matter.
These parties have also alleged that users of Robinhood have lost millions of dollars as they were not able to sell or buy during the freeze. Other allegations on the company include, ‘market manipulation’ for the purpose of helping other financial institutions.
The cases were reportedly filed only a few days ago and might not be heard until the deflation of the GameStop bubble. A judge from Washington certified a class action suit against Robinhood just last week. Dating back to 2019, this case is regarding the “refer a friend” program of the trading app.
As per reports, Robinhood has assisted the facilitation of an unprecedented boom around a handful of ‘meme stocks’. However, the freezing of trades on numerous of these stocks, comprising GameStop ($GME) as well as Nokia ($NOK), AMC ($AMC), Bed Bath & Beyond ($BBBY), and BlackBerry ($BB) have led to the infuriation of app users on January 28th, 2020.
The company has reportedly defended its decision, calling it a risk-management move that was undertaken in the face of ‘extraordinary circumstances’. Robinhood has refused the acceptance of reports which claim that it had sold some shares of the users without seeking permission.
According to a Robinhood user, Brendon Nelson, courts should mandate the trading app to reinstate complete access to trading GameStop stock and also make it pay for financial damages to any Robinhood users who were not able to proceed with the execution of GameStop stock trades. While other parties have also made similar pleas, numerous are keen on seeking the class action status, added Nelson.