A class action lawsuit has been filed against Robinhood for preventing users from buying “meme stocks,” as bipartisan support grows for an investigation.
WallStreetBets and ordinary investors were involved in a short squeeze of GameStop and other stock this week, screwing over hedgefunds that had bet against the company, with users seeing massive profits, and the investment bankers on Wall Street losing billions. Most of these people used free-trading apps like Robinhood in order to place their investments.
However, Robinhood and other apps, such as Trading 212 from the UK, stopped traders from buying GameStop and other “meme stocks” like AMC, Nokia, and others, due to the “recent volatility,” and restricting transactions to “position closing only.” Some of the stocks took a nosedive, with potentially millions of people unable to buy, and only able to sell.
As a result of their shenanigans, a class action lawsuit has been filed against Robinhood in the Southern District of New York, claiming that Robinhood delisted GameStop from its app and stopped the buying of shares in it and other memestocks “in order to slow the growth of GME… [and was] done purposefully and knowingly to manipulate the market for the benefit of people and financial institutions who were not [their] customers.”
Accusations had already been flying of collusion and corruption between Robinhood and Wall Street, with some users highlighting that Robinhood’s “primary revenue stream” last year was from selling orders to hedgefunds like Citadel Securities. Citadel bailed out Melvin Capital, the hedgefund that took the biggest hit from their attempt to short GameStop.
The lawsuit demands an immediate injunction requiring Robinhood to reinstate GameStop trading on their platforms, along with punitive damages for the defendants.
It comes as Robinhood is being slammed by people from all across the political spectrum, including a number of Democrat and Republican Congressmen. In a tweet, Representative Alexandria Ocasio-Cortez described the situation as “unacceptable,” and saying that she would support a Congressional hearing as a member of the Financial Services Committee, to which Senator Ted Cruz said he fully agreed.
Representatives Rashida Tlaib and Dr Paul Gosar also joined in. Tlaib said that the “absurd” situation was tantamount to obvious “market manipulation… to protect Wall St hedge funds,” while Gosar highlighted this was another example of Big Tech colluding with people, in this case Wall Street, “in a clear Securities Exchange Act violation and Sherman-Anti Trust violation.”
This is beyond absurd. @FSCDems need to have a hearing on Robinhood's market manipulation. They're blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who've used the stock market as a casino for decades. https://t.co/CGkJxVfzkv
— Rashida Tlaib (@RashidaTlaib) January 28, 2021
Wall Street colluding with Big Tech to in a clear Securities Exchange Act violation and Sherman-Anti Trust violation to stop lawful trading by individual investors. You can’t change the rules because you’re losing. #DeleteRobinhood #reddit #reddittraders https://t.co/qRQDArn71M
— Paul Gosar (@DrPaulGosar) January 28, 2021