A federal class-action lawsuit was filed against the online trading platform Robinhood after it restricted users from buying and trading GameStop shares after it saw an uptick in its stock. The app had blocked other retail investors from buying certain stock including AMC, Blackberry, Nokia, Bed Bath & Beyond, Express Inc., KOSS Corp, and Naked Brand.
The complaint was filed by Southern District of New York Attorney Alex Cabeceiras on behalf of a Massachusetts resident who said he had logged into his Robinhood account and discovered that GameStop’s stock had disappeared from the app.
“Robinhood purposefully, willfully, and knowingly removing the stock ‘GME’ from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market,” the complaint reads.
Others are also looking to investigate Robinhood’s process. They would recruit social media influences to encourage individuals to sign up and fund a Robinhood account. Users would purchase shares of securities with no consideration as to the suitability of the purchases.
The trading platform’s decision to ban Gamestop came after WallStreetBets, a popular retail investors forum, created an organic campaign to raise GameStop’s stock price after several hudge fund investors were attempting to cut it short for a profit. This process known as a short-squeeze forced sellers to buy back into the stock to cover their losses while Robinhood users were affected and suffered losses as a result of investing in Gamestop or AMC.
Lawmakers have called for a hearing on the popular stockbroker service for manipulating the market. There has been bipartisan support in questioning Robinhood’s decision to prohibit customers from buying or searching specific stocks and stealing millions of dollars from their users to protect people who’ve used the stock market as a casino for decades.
Republican senator Marsha Blackburn also called on Robinhood to free the traders. “Once again Wall Street is crushing the little person on Main Street. Wall Street bet on America’s decline and got caught. Now, they want to stop hard-working Americans from betting on America’s rise,” she wrote.
Trading platforms continue to prioritize the interests of a handful of Wall Street hedge funds over decentralized, individual traders. Interactive Brokers also placed restrictions on the sales of the stock and Charles Schwab noted that customers could still trade GameStop but that it limited certain kinds of transactions “involving more risk.”
With more regulation and equality in financial markets comes more transparency – something the Dems might not be too interested in.