Robinhood Hit with Lawsuits

GameStop by JJBers is licensed under CC BY 2.0

Several lawsuits have been filed against Robinhood Financial after the company restricted certain trades on a number of '90s-era tech stocks such as GameStop and BlackBerry, companies whose stock prices have exploded in recent days due to coordinated action from an investing thread on Reddit.

Brendon Nelson, a retail investor from Massachusetts, filed a suit in the Southern District of New York, alleging, among other things, that Robinhood breached "the implied covenant of good faith and fair dealing" with its customers when it failed to announce that it was imposing restrictions on GameStop transactions that would bar some customers from making certain transactions. 

"On or about January 27, 2021 Robinhood, in order to slow the growth of GME and deprived their customers of the ability to use their service, abruptly, purposefully, willfully, and knowingly pulled GME from their app," the lawsuit reads. "Meaning, retail investors could no longer buy or even search for GME on Robinhood’s app."

Nelson alleged that Robinhood's actions "were done purposefully and knowingly to manipulate the market for the benefit of people and financial intuitions who were not Robinhood’s customers."

GameStop by JJBers is licensed under CC BY 2.0