Robinhood Hit With Class Action Lawsuit Over Trading Restrictions
On Thursday morning, Robinhood released a statement saying, "in light of current market volatility, we are restricting transactions for certain securities to position closing only, including AMC and GME." The lawsuit was filed not long after.
More than half of Robinhood users own shares of GameStop and are furious that the app only allows them to sell shares now. The price of GameStop has surged in recent weeks, fueled by the popular subreddit "WallStreetBets."
The lawsuit was filed in the Southern District of New York and claims that the app “purposefully, willfully, and knowingly removing the stock ‘GME’ [GameStop] from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market.”
Robinhood is only allowing users to close out of positions in GameStop, AMC, and BlackBerry. but not purchase additional shares.
Robinhood is not the only brokerage to restrict trading in the past week. Earlier this week, Charles Schwab and TD Ameritrade attempted to restrict users from trading companies that were being pumped up on WallStreetBets.
The moves by brokerages have drawn scrutiny from lawmakers and investors claiming "market manipulation."
See the CEO response here.
Robinhood CEO Vlad Tenev speaks out on decision to restrict trading on GameStop and other stocks
Robinhood CEO Vlad Tenev joins CNBC to speak with Andrew Ross Sorkin about the commission-free trading app's decision to restrict trading on stocks such as G...