Dave Portnoy, Alexandria Ocasio-Cortez and Ted Cruz are all slamming the Robinhood bans on GME
Trading platform Robinhood found itself in the center of controversy today, and the water is only starting to boil. After a series of Robinhood bans on high-flying Reddit stocks like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC), a Robinhood class action lawsuit has been filed in the southern district of New York. Here is what you need to know now.
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Redditors on r/WallStreetBets took GME stock and its short-squeeze peers to the moon. That rally dominated Wall Street news throughout the week, and it cost high-profile short-sellers quite a bit of money. Regulators have called for trading halts, and experts are bashing the cult of retail investors. Robinhood took a stand of its own Thursday, placing restrictions on eight securities including GME. As a result, investors can only close out their positions. There are also additional margin requirements on certain securities.
The Robinhood bans have been more than controversial. Ja Rule, Mark Cuban, Dave Portnoy and dozens of others are backing the r/WallStreetBets crowd. Users are leaving 1-star reviews and outright deleting the Robinhood app. And amid loud calls for a class-action lawsuit, plaintiff Brendan Nelson delivered.
Nelson, on behalf of all Robinhood investors, filed the Robinhood class action suit in the southern district of New York. He claims that Robinhood “purposefully, willfully, and knowingly” removed GME from its trading platform. Because of this, retail investors lost the “ability to invest in the open-market.” Nelson says he personally was affected by the trading restrictions, and believes he and other customers lost out on earnings opportunities.
As a result, he alleges that Robinhood may have violated rule 5310 from the Financial Industry Regulatory Authority (FINRA). Rule 5310 requires that Robinhood “must make every effort to execute a marketable customer order that it receives promptly and fully.”
I own $amc $nok $nakd. I bought them with the understanding we live in a free market where people can buy and sell stocks fair and square and at their own risk. I will hold them till the death as a reminder that @RobinhoodApp founders must go to prison
Enemies make strange bedfellows. Lock em up
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary.
More than half of all Robinhood users own at least some GameStop stock.
They are now unable to freely trade it; the app is only allowing users to close out their positions.