Still Reeling From The Repercussions Of The Early 2021 Hot Stock Market Activity, Robinhood Faces Multidistrict Litigation Accusing It Of Negligence And Other Charges
Stocks and financial services company Robinhood is facing a multidistrict litigation class action lawsuit (MDL) accusing them of harming their customers’ best interests when the company cut off and blocked investors’ access to unpredictable stocks in the market in early 2021.
Multiple Class Action Suits Raised Against Robinhood Turned Into An MDL
According to reports, Robinhood is named as the defendant in more than 50 lawsuits filed in different courts all over the United States, with all the same claims against them that ended up being compiled and consolidated into one multidistrict litigation (MDL) case set to be heard in a court in Florida.
The Robinhood MDL is a result of the authorities deciding to put together the different class action lawsuits filed against Robinhood into a single MDL to streamline the whole legal process in May 2021.
It alleges that Robinhood did not do its due diligence to implement risk control mechanisms that ended up hurting its investors when the stock market had a volatile run in early 2021 over GameStop’s rates.
It is reported that many Robinhood traders and investors were locked out of their capabilities to conduct stock trading on the platform and were restricted to trade using uncontrollable stocks.
MDL: Robinhood Was Negligent And It Ended Up Hurting Their Investors Best Financial Interests
The complainants in the cases that ended up getting bundled up into one MDL have all argued in unison: Robinhood did not have any protective safety mechanisms in place for traders to fall back on to take on the complexity of daily trading.
They specify that Robinhood did not possess any cash reserves on hand to be able to support day-to-day market trading with hotly contested and trending stocks like GameStop back in early 2021.
Robinhood’s actions of freezing their investors’ abilities to trade during a hot market really reportedly ended up causing customers to lose $10 billion.
It is worth noting that other online trading companies were also involved in the cases filed with regards to the stock market activity at the beginning of the year. However, Robinhood was mostly named as the defendant to many of the class action suits that ended up being turned into an MDL.
Robinhood is officially facing different charges, including negligence on their end, breach of contract, breach of the implied covenant of good faith and fair dealing, and others.
The Robinhood MDL is an ongoing case, and Consider The Consumer will continue to report on it and will keep you informed with the latest developments as soon as they are made available to the public.
Robinhood is just one of the many stock brokerages and financial services companies in the United States that offer a plethora of services to its client base. However, the company is best known as a platform that offers an easy-to-understand concept and system for non-professional stock investors. Robinhood calls Menlo Park, California as its corporate headquarters.
Editor’s Note on Robinhood MDL Class Action Lawsuit 2021:
This article discusses the class action lawsuits turned into an MDL that Robinhood is facing in relation to how they handled their investors during the GameStop related hot market activity that swept the beginning of 2021.
Case Name(s) & No.(s): In re: January 2021 Short Squeeze Trading Litigation; Case No.: 1:21-md-02989
Jurisdiction: United States District Court for the Southern District of Florida
Products/Services Involved: Robinhood Stock Trading Services
Allegation(s): Robinhood allegedly prevented its users from participating in the mad rush that shook the stock market in early 2021 because they were not prepared to handle such scenarios, ultimately limiting and hurting their investors’ potential profit.
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