Robinhood Faces a Class Action Lawsuit Following Restrictions on GameStop Stock Trades
The online brokerage announced the controversial measures earlier today.
After instituting trading restrictions on GameStop securities and other surging stocks, online brokerage firm Robinhood has been dealt with a class-action lawsuit.
The plantiff, Massachusetts resident Brendon Nelson, has brought the lawsuit on behalf of all Robinhood users based within the U.S. and additionally “all Robinhood customers within the United States who were not able to execute trades on GME after Robinhood knowingly, willfully, and purposefully removed it completely from their platform.”
To that end, the lawsuit alleges negligence as well as breaches of contract, fiduciary duty, and good faith and fair dealing.
Robinhood announced the measures in a statement this morning. “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,” the statement reads. GameStop (GME), AMC (AMC), BlackBerry (BB), Bed Bath & Beyond (BBBY), Express, Inc. (EXPR) Nokia (NOK) and Tootsie Roll Industries (TR) are among the 13 companies affected, and the margin requirements for some additional securities were also increased.
Later this afternoon, the company issued another statement explaining that the trading restrictions were set to maintain compliance with capital requirements mandated by the SEC and that it would reopen limited buys of these securities on Friday. “We’ll continue to monitor the situation and may make adjustments as needed,” the statement continues.
The class-action lawsuit filing is available in full here.
If you need a refresher on the GameStop “short squeeze,” revisit HYPEBEAST’s coverage of the initial stock surge on Monday and Wednesday’s news of Melvin Capital Management, which suffered significant losses and required a $2.75 billion USD cash infusion.
