Robinhood Faces Lawsuits After Restricting Users’ Ability to Purchase Certain Stock

Posted on January 29th, 2021 at 2:56 PM
Robinhood Faces Lawsuits After Restricting Users’ Ability to Purchase Certain Stock

From the Desk of Jim Eccleston at Eccleston Law LLC:

On January 29, 2021, in the midst of increased trading and extreme volatility on certain stocks, including GameStop Inc., Robinhood restricted its users’ ability to trade those stocks. GameStop stock, which was trading around $19 at the end of 2020, peaked at more than $500 per share this week. While Robinhood would allow its users to sell their position in those stocks, users were unable to purchase the stock. Robinhood’s trade restrictions was widely discussed, including in tweets from U.S. Representative Alexandria Ocasio-Cortez and Senator Ted Cruz.

Robinhood is now the subject of at least two federal lawsuits, filed in Manhattan and Chicago, ChicagoBusiness.com reported. The Manhattan lawsuit was filed by Brendon Nelson, a Robinhood user from Massachusetts. Nelson alleged that Robinhood’s conduct breached its customer agreement a violated industry rules.

In Chicago, Richard Joseph Gatz filed a lawsuit against Robinhood. Gatz alleged that Robinhood also prohibited users trading stock in Blackberry, Nokia, and AMC Theaters. According to Gatz’s lawsuit, Robinhood’s conduct was designed “to protect institutional investment at the detriment of retail customers.”

Robinhood was not the only online brokerage to restrict users’ ability to trade certain stocks. Interactive Brokers Group Inc. and E*Trade also restricted trading of GameStop stock. Additionally, Fidelity, Schwab and TD Ameritrade experienced technical problems.

Eccleston Law is investigating claims by investors that have been impacted by this situation. Call us today.

 

Tags: eccleston, eccleston law, robinhood, restricted purchasing

Return to Archive

TESTIMONIALS

Previous
Next

Thank You from the bottom of our hearts for all you have done for us. When we realized this was a very bad investment - we did not know where to turn for help. Then we received your name. When we called you - you were so kind to us and then agreed to help us. For this we are so very grateful. The world would be a much nicer place if there were more people like the two of you in it. We will always remember all the help and kindness you have shown us. Thank you so very very much for everything.

Wayne and Judy S.

LATEST NEWS AND ARTICLES

March 13, 2025
Congress Considers Expanding the Accredited Investor Definition

A recent congressional hearing examined potential reforms to the accredited investor definition, a critical threshold determining who can participate in private market investments.

March 12, 2025
GPB Capital Investors May Receive Some Compensation Under Proposed Distribution Plan

GPB Capital Holdings investors have not received returns on their investments since 2018. According to InvestmentNews, after years of litigation, a court-appointed receiver has submitted a plan to return funds to the 17,000 investors who purchased $1.8 billion in GPB limited partnerships.

March 11, 2025
Former CNBC Analyst Pleads Guilty to $2.7 Million Securities Fraud Scheme

James Arthur McDonald Jr., a former financial advisor and frequent CNBC guest analyst, has agreed to plead guilty to securities fraud, admitting to defrauding investors out of at least $2.7 million, as reported by ThinkAdvisor. The felony charge carries a maximum sentence of 20 years in federal prison.