ABOUT THIS CASE
Helping Business Owners Move Forward
Retail investors have been blocked from the opportunity to lawfully earn through the purchase and sale of said securities. On or around January 11, 2021, stocks in GameStop Corp. (“$GME”) began to rise. On or about January 28, 2021, Robinhood pulled off $GME from their app and as a result, retail investors could not buy or even search for $GME on Robinhood’s app. Upon information and belief, Robinhood intentionally, purposely, and maliciously blocked $GME’s stock on its app to slow the growth of $GME.
Background
Investors had sued Robinhood alleging they lost money when they couldn’t trade out of GameStop and other stocks. At the time, Citadel executed a large portion of Robinhood’s trades under an industry business model known as payment for order flow.
Legal Strategy
Robinhood breached the Customer Agreement based on the following: (1) failing to disclose that it would pull $GME stock from its trading platform; (2) by knowingly putting its customers and retail investors at a disadvantage compared to other financial investors or brokerage firms; (3) by preventing its customers, including Plaintiff, from performing transactions in a timely manner under the contract; (4) by failing to execute trade exercised by its customers; (5) and by failing to comply with the applicable legal, regulatory and licensing requirements.
Result/Implication
The incident triggered Congressional hearings, where lawmakers grilled Robinhood CEO Vlad Tenev and Citadel’s Ken Griffin. The Securities and Exchange Commission today charged Robinhood Financial LLC for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders. Robinhood agreed to pay $65 million to settle the charges.