Robinhood And Other Financial Services Apps In Hot Water, Face Class Actions Lawsuits In Light Of The Recent GameStop Fiasco
Robinhood, along with other stockbrokers over at Wall Street, is barraged with a series of different lawsuits alleging the aforementioned parties have done misdeeds in disabling retailer’s stock options on their respective platforms.
This comes after an unprecedented short-selling frenzy that shook the core of many large hedge funds at Wall Street.
It all started when Reddit users and members of the online forum WallStreetBets flocked on to one of the most short-stocked companies publicly listed, GameStop, which resulted in its market shares soaring in value at a rate never seen before.
This led to one of the major hedge funds with a stake at GameStop, Melvin Capital, almost getting wiped out of its funds once the rallying of the company’s stock value started.
Many fellow financial giants decided to bail out Melvin Capital along with them calling out authorities to look into the matter.
As of press time, GameStop stocks value is slowly declining as most of the retail stockbrokers who pushed its value earlier this year have been banned from using several investment platforms like Robinhood – ergo, the lawsuit.
Different parties have filed their separate class action lawsuits against financial services applications Robinhood, TD Ameritrade, and Charles Swab in response to the imposed restrictions.
As of writing, cases were filed in federal courts in the states of Illinois, California, and Texas.
The class actions’ specifics down to the nitty-gritty are a little different compared to one another, but they all claim a single, unifying allegation – Robinhood, along with other financial services companies, have halted their ability to do stock trading in favor of the different institutional hedge funds at Wall Street.
They have said that these companies are guilty of fraud and negligence – among other accusations, with some saying that it is quite ironic that Robinhood ended up stealing from the poor and giving it to the rich institutional hedge funds with high stakes interests in the country’s financial markets.
With the extent of the matter, many more lawsuits are seen to be filed in the coming days.
On the other hand, as the dust started to settle down, authorities have announced that they will look into the events that have led to the sensational occurrences that have rocked Wall Street.
The Attorney General of New York announced in an official statement that they would look into the subject matter.
Additionally, officials from the Securities and Exchange Commission also promised to conduct a separate investigation.
Lawmakers from both parties also criticized Robinhood’s decision to halt retailer stock trading, which seemingly points out that the issues of market manipulation and reforms in the country’s financial institutions are poised to become a bipartisan issue in legislation.
About the company:
Robinhood, established in 2013, is a California-based stock brokerage services company that aims to help retail stockbrokers or everyday consumers to easily buy and sell stocks in order to participate in the stocks exchange market.
Editor’s Note On Robinhood Vs GameStop Class Actions:
This article is published to inform you of the latest class action lawsuits filed against Robinhood and its peers after the catalytic events leading to the GameStop short sell, which resulted in many institutional hedge funds bleeding a lot of money.
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