I've read a couple of the lawsuits on courtlistener. From what I've read, these lawsuits are going to go absolutely nowhere.<p>The biggest problem most of the lawsuits face is that there is a provision in the Terms of Service that basically says that Robinhood can prevent you from trading in any stock it wishes. Any complaint that amounts to "Robinhood violated its contract" is going to go down in flames as a result--it didn't violate its contract; the people who are complaining didn't <i>read</i> the contract.<p>That really only leaves two kinds of claims that might have legs: arguing that Robinhood violated securities laws, and arguing conspiracy on the part of hedge funds. The first part is difficult to win on because many of the complainants will simply lack the standing to do so (you have to have owned the stocks in question and bought/sold at a manipulated price to show standing, and since the complaints are generally on the theme of "we tried to buy but couldn't", they fail that) [1]. The last one might survive until discovery if properly pled, but I sincerely doubt they'll ever eventually win it.<p>[1] One of the cases filed for a temporary restraining order mainly on the basis of the complaint. The judge found that the briefing didn't even meet the "raises serious questions" burden of proof, although they mentioned that the TRO failed really hard at the "suffered irreparable harm" part because losing money is pretty much by definition a reparable harm.
I'm pretty skeptical of the negative attention Robinhood is receiving. It seems like the entities who actually acted in bad faith, the ones who attempted illegal shorts, are trying to divert attention. Like someone else said, Robinhood is just the fall guy here.
Currently Robinhood won't send me my tax forms from 2020. I have a trivial amount of money in the account but it's the only thing preventing me from filing taxes yet. Everything else has been ready since early March.
These lawsuits seem silly.<p>Are investors suing for the right to be the biggest fool in a pump and dump scheme?<p>The consequences of not buying GameStop is that the investor has more cash in their account which doesn't change in value. Most of those who would have bought around the peak would have lost a lot of money.<p>If Robinhood prevented investors from selling their shares or closing their positions then that would be grounds to sue. Investors were exposed to an extremely volatile stock with no means to exit and could have lost everything in that scenario.
I don’t really care what the rules are. Arbitrarily preventing people from buying, but not selling, is market manipulation. Any company that took part in this should be dismantled. If you need to halt trading because of liquidity requirements, halt all trading.
Everything about this story is just so frustrating.<p>- While the GameStop thing should be investigated and the lack of transparency criticized, Robinhood’s stated reason for halting the trades is plausible and corroborated by other people. I suspect their shadiness was because their internal finances are worse than they are letting on. The idea that they were acting as the foot soldiers of hedge funds (who were hardly overexposed to GME anyway) is preposterous.<p>- Robinhood absolutely deserves to get in legal trouble (like “send the CEO to prison”) for its horrendously predatory “appification” of retail investment[1]. I had a poor opinion of Robinhood and I was still shocked by how horrible their behavior was[2]:<p>> In 2019, Robinhood rolled out a new cash management feature with an early access waitlist and utilized gamification to reward customers who interacted daily with the application by improving their position on the waitlist. Customers who did not interact daily watched their position on the waitlist precipitously decline, while those who succumbed to the effects of Robinhood's gamification soared up and up the waitlist.<p>> In an effort to encourage trading, Robinhood provides lists of securities on its application, including lists of the most-traded securities on Robinhood's platform and the most popular securities traded by Robinhood customers. This is no different than a broker-dealer agent handing a list of securities to a customer, pretending to be surprised when the customer purchases securities from that list, and then proclaiming that he made no recommendations to that customer.<p>> Robinhood advertisements use young actors and illustrate Robinhood's attempt to lure young, inexperienced investors into using its platform...[f]or example, one such advertisement contains a clip of a young adult saying "I'm a broke college student and investments might help my future tremendously."<p>Sincerely rotten folks at that company.<p>[1] <a href="https://www.cnbc.com/2020/12/16/robinhood-reportedly-facing-complaint-by-massachusetts-regulators-over-targeting-young-users.html" rel="nofollow">https://www.cnbc.com/2020/12/16/robinhood-reportedly-facing-...</a><p>[2] <a href="https://www.sec.state.ma.us/sct/current/sctrobinhood/MSD-Robinhood-Financial-LLC-Complaint-E-2020-0047.pdf" rel="nofollow">https://www.sec.state.ma.us/sct/current/sctrobinhood/MSD-Rob...</a>