The Reddit/Gamestop/Wall Street debacle just keeps on trucking.
After amateur investors using social media mobilised a short-squeeze against hedge funds betting against game retailer Gamestop – costing very rich people billions of dollars in the process – one of the main apps they were using, RobinHood, banned trading on several stocks (including Gamestop) last week.
Given how litigious people in the USA can be, this situation was always going to end messily.
According to The Verge, RobinHood is now staring down the barrel of a barrage of lawsuits over its decision to suspend trading on its platform; around 30 parties across 10 states are suing the company for a variety of complaints, many of them seeking class action status.
Complaints range from users claiming they lost millions of dollars during the trade ban, to others accusing RobinHood of attempting to manipulate the market on behalf of other financial institutions.
At the time it suspended trading, RobinHood posted a blog in which it cited “extraordinary circumstances” and “market volatility” as its reasons for doing so. It has since allowed trading to resume, but only in a limited fashion.
This clearly didn’t go down well with many of RobinHood’s users, hence the list of lawsuits it’s now facing. The situation has also attracted political interest with Politico reporting that RobinHood CEO Vlad Tenev is expected to testify in a February 18th hearing before the House Financial Services Committee.
