29 Jan Robinhood App Faces Class-Action Lawsuit After Barring Users From Buying Shares

They’ve shared a statement claiming that they will be releasing restrictions placed on some trading options, but Robinhood’s response comes a tad too late for the public. Wall Street has become a hot topic among retail investors after a group of Redditors changed the game. Since January 11, GameStop’s stock has reached new heights after Reddit’s WallStreetBets group invested and caused the stock to increase to more than 1,000 percent. According to CNN, “this forced short-sellers who were betting against the stock to buy shares to hedge their positions, sending the stock soaring even higher.”

Once the news circulated, more Robinhood investors began grabbing their piece of the pie, but controllers of the app put a stop to it on their platform. Soon, Robinhood barred people from buying shares of GameStop (GMC), AMC (AMC), Bed Bad & Beyond (BBBY), and Nokia (NOK) because they claimed this specific situation was “volatile” trading.

The move caused the app to come under heavy scrutiny as it stood accused of manipulating the system to further benefit the wealthy while keeping opportunities away from everyday people. A Robinhood user has reportedly filed a class-action lawsuit against the app, claiming that they have “rigged the market” against its own users.

“Robinhood’s actions were done purposefully and knowingly to manipulate the market for the benefit of people and financial institutions who were not Robinhood’s customers,” the lawsuit states. The court document also accuses Robinhood of “[depriving] retail investors of potential gains” that could have been acquired while the stock was still low. The “ClassActionRobinHood” Reddit forum has been launched and already has over 31K users. 

“We’re committed to helping our customers navigate this uncertainty,” Robinhood said in a statement. “We fundamentally believe that everyone should have access to financial markets.” Tomorrow (January 29), limited purchase options will be available for the companies that were previously blocked.

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