6 ms·

Class Action Lawsuit Filed Against Robinhood in the State of New York

144 points by jbegley 6y ago

TooCleverByHalf 6y ago
What they did is the antithesis of their name. What a time to be alive.
- m-p-3 6y ago
  They should rename to Robbin' 'Hood
  - jxi 6y ago
    from Robinhood to robbin da hood
firebaze 6y ago
What happens if you wanted to sell de-listed stocks you have in your portfolio? Who's responsible for the potential loss incurred by not being able to sell? Is this part of the class action? (I can't open the document, there's only a PACER login screen for me)
- param 6y ago
  I think they are allowing you to sell, not buy
- trsohmers 6y ago
  Even though robinhood is claiming to allow people to close their open positions, I have been trying for hours to close two options contracts and continue to get error messages saying that I "don't have enough buying power", which is insane since I am just trying to sell my already owned contracts! I was up over 300% earlier this morning when I wanted to sell, but now overall down ~15% in large part due to Robinhood's either incompetence, neglect, malice, or some combination of the three. EDIT: By the off chance anyone from Robinhood is reading this, it would be great to get back to one of my multiple support emails or request for phone support. While I am understanding of the fact that Robinhood is probably being bombarded at the moment and I am sympathetic to whoever is handling the support line, this is a self inflected wound by Robinhood that has resulted in a lot of their customers losing money and now despising them.
  - artificialLimbs 6y ago
    Last month I began contacting them because of an error my bank made, which caused RH to lock my account for one month. RH kept demanding I "explain what happened" and wouldn't unlock my account for moving my money out. Exchanged about 3 emails with revolving support staff, all obviously canned responses, each taking about 2 (BUSINESS) days to get a reply. Got fed up with this and told them I was going to small claims (fortunately it was less than $2,500) if they didn't get me my money by next day's end. Exchanged 3 or 4 more emails which *miraculously began flowing in about an hour apart and I was 'allowed' to withdraw my $. Left Robinhood early this month after that. Fuck Robinhood.
2pEXgD0fZ5cF 6y ago
I have barely any knowledge when it comes to the stock market. But what Robinhood did here at least sounds highly illegal already to me. Question: Is there any way Robinhood could phrase this decision that makes it OK to selectively prevent their users from buying certain stocks during an arbitrary time period?
- cmdli 6y ago
  Not trying to defend Robinhood here, but it would probably go like this: Robinhood is a private service and potentially has liability from what it enables users to do. They are under no obligation to provide trades on specific stocks, and if users want to trade that specific stock then they are free to use a different service. Users can sell/trade their assets out of the Robinhood service if they are unhappy with the current state of affairs. Of course, the users are free to file any lawsuits they wish. Saying "the game is rigged and its unfair" isn't exactly a legal argument, though.
  - TameAntelope 6y ago
    I'm curious what relevance Section 230 has here. That is, would Robinhood (and Reddit) be concerned that allowing users to execute a market manipulation attempt expose the platform to legal trouble, or are they protected by Section 230 (up to the point where the SEC asks them to do something specifically)? This feels like another example of, "Their house, their rules." You don't have to use Robinhood to trade on the NYSE, so the question becomes, "Couldn't these users execute these trades elsewhere?"
    - tourist_ 6y ago
      I am not a U.S. person, but isn't/shouldn't there be a set of rules for the provider of a brokerage account. Sure, its their house, their rules, but how can they change the rules overnight? If what Robinhood did isn't illegal, then I suppose I had the wrong impression about the strength of financial regulations in the U.S. (If this happened in my home country, I would never participate in the markets again.)
tiahura 6y ago
Do I have this right?: 1. Robinhood's TOS explicitly gives them the right to do this. 2. Robinhood is free. 3. Any alleged harm could be mitigated by using another service. And attorneys wonder why we're held in lower regard than used car salesman.
- paulddraper 6y ago
  Market manipulation by a brokerage is illegal, regardless how much fine text you print.
- aeternum 6y ago
  TOS don't always hold up. Plaintiffs have successfully convinced juries that companies make their TOS so difficult to understand and lengthy that the average user cannot read/understand it. Recently companies have also added language that allows them to change the TOS at any time, which is questionably legal.
- jMyles 6y ago
  The legal framework under which they operate - even if most of us prefer it didn't exist and instead were relegated to a provable fair platform - expressly forbids using the platform as a tool of manipulating a specific instrument. And the appearance is certainly that that's what they've done. So presumably participants (widely defined) had already built that information into their decision making.
andrethegiant 6y ago
Yesterday they were cherished, today they are tarnished. Good luck on that IPO, Robinhood.
readyp1 6y ago
For those who want to read the filing/follow along with the case but don't have access to PACER (which is where the docket link in the tweet leads), CourtListener's RECAP archive [0] has this case listed already [1], and a kind soul has already uploaded this particular filing [2]. Hopefully, as the case develops, people with PACER access will continue to buy and contribute the filings to RECAP. [0] https://www.courtlistener.com/recap/ https://www.courtlistener.com/recap/ [1] https://www.courtlistener.com/docket/50143052/nelson-v-robinhood-financial-llc/ https://www.courtlistener.com/docket/50143052/nelson-v-robin... [2] https://www.courtlistener.com/recap/gov.uscourts.nysd.553175/gov.uscourts.nysd.553175.1.0_3.pdf https://www.courtlistener.com/recap/gov.uscourts.nysd.553175...
tareqak 6y ago
I wonder if the class action will broaden against all the brokers who took this same action instead of just Robinhood (~~I read others mention Interactive Brokers, TD Ameritrade, Charles Schwabb, Trade212 (thank you 'Avalaxy), and others, but I have no sources to point to myself~~ 'johnbrodie said that TDA and other blocked buying on margin). In that scenario, the plaintiffs and defendants could definitely simply interpreted by normal people to be something like “People of the United States vs. Wall Street”. Both mainstream and alternative/niche media would have a field day over this story. Is it really worth billions of dollars to further destroy the wavering belief that Americans still have about the American dream? How can you have any semblance of unity without evidence and/or faith that the powers that be in business and government will allow the ordinary person to have a realistic path towards tangible and meaningful prosperity?
- johnbrodie 6y ago
  Posted this in another thread, but TDA and other blocked buying on margin, not buying with your own money. Completely different IMO. Source: Their own statements and buying GME this morning on TDA without issue.
  - tareqak 6y ago
    Thank you 'johnbrodie. I updated my message.
- Avalaxy 6y ago
  Trading212 also halted buying GME/AMC.
  - tareqak 6y ago
    Thank you 'Avalaxy.

144 points by jbegley 6y ago

TooCleverByHalf 6y ago

What they did is the antithesis of their name. What a time to be alive.

m-p-3 6y ago
They should rename to Robbin' 'Hood
- jxi 6y ago
  from Robinhood to robbin da hood

firebaze 6y ago

What happens if you wanted to sell de-listed stocks you have in your portfolio? Who's responsible for the potential loss incurred by not being able to sell? Is this part of the class action? (I can't open the document, there's only a PACER login screen for me)

param 6y ago
I think they are allowing you to sell, not buy
trsohmers 6y ago
Even though robinhood is claiming to allow people to close their open positions, I have been trying for hours to close two options contracts and continue to get error messages saying that I "don't have enough buying power", which is insane since I am just trying to sell my already owned contracts! I was up over 300% earlier this morning when I wanted to sell, but now overall down ~15% in large part due to Robinhood's either incompetence, neglect, malice, or some combination of the three. EDIT: By the off chance anyone from Robinhood is reading this, it would be great to get back to one of my multiple support emails or request for phone support. While I am understanding of the fact that Robinhood is probably being bombarded at the moment and I am sympathetic to whoever is handling the support line, this is a self inflected wound by Robinhood that has resulted in a lot of their customers losing money and now despising them.
- artificialLimbs 6y ago
  Last month I began contacting them because of an error my bank made, which caused RH to lock my account for one month. RH kept demanding I "explain what happened" and wouldn't unlock my account for moving my money out. Exchanged about 3 emails with revolving support staff, all obviously canned responses, each taking about 2 (BUSINESS) days to get a reply. Got fed up with this and told them I was going to small claims (fortunately it was less than $2,500) if they didn't get me my money by next day's end. Exchanged 3 or 4 more emails which *miraculously began flowing in about an hour apart and I was 'allowed' to withdraw my $. Left Robinhood early this month after that. Fuck Robinhood.

2pEXgD0fZ5cF 6y ago

I have barely any knowledge when it comes to the stock market. But what Robinhood did here at least sounds highly illegal already to me. Question: Is there any way Robinhood could phrase this decision that makes it OK to selectively prevent their users from buying certain stocks during an arbitrary time period?

cmdli 6y ago
Not trying to defend Robinhood here, but it would probably go like this: Robinhood is a private service and potentially has liability from what it enables users to do. They are under no obligation to provide trades on specific stocks, and if users want to trade that specific stock then they are free to use a different service. Users can sell/trade their assets out of the Robinhood service if they are unhappy with the current state of affairs. Of course, the users are free to file any lawsuits they wish. Saying "the game is rigged and its unfair" isn't exactly a legal argument, though.
- TameAntelope 6y ago
  I'm curious what relevance Section 230 has here. That is, would Robinhood (and Reddit) be concerned that allowing users to execute a market manipulation attempt expose the platform to legal trouble, or are they protected by Section 230 (up to the point where the SEC asks them to do something specifically)? This feels like another example of, "Their house, their rules." You don't have to use Robinhood to trade on the NYSE, so the question becomes, "Couldn't these users execute these trades elsewhere?"
  - tourist_ 6y ago
    I am not a U.S. person, but isn't/shouldn't there be a set of rules for the provider of a brokerage account. Sure, its their house, their rules, but how can they change the rules overnight? If what Robinhood did isn't illegal, then I suppose I had the wrong impression about the strength of financial regulations in the U.S. (If this happened in my home country, I would never participate in the markets again.)

tiahura 6y ago

Do I have this right?: 1. Robinhood's TOS explicitly gives them the right to do this. 2. Robinhood is free. 3. Any alleged harm could be mitigated by using another service. And attorneys wonder why we're held in lower regard than used car salesman.

paulddraper 6y ago
Market manipulation by a brokerage is illegal, regardless how much fine text you print.
aeternum 6y ago
TOS don't always hold up. Plaintiffs have successfully convinced juries that companies make their TOS so difficult to understand and lengthy that the average user cannot read/understand it. Recently companies have also added language that allows them to change the TOS at any time, which is questionably legal.
jMyles 6y ago
The legal framework under which they operate - even if most of us prefer it didn't exist and instead were relegated to a provable fair platform - expressly forbids using the platform as a tool of manipulating a specific instrument. And the appearance is certainly that that's what they've done. So presumably participants (widely defined) had already built that information into their decision making.

andrethegiant 6y ago

Yesterday they were cherished, today they are tarnished. Good luck on that IPO, Robinhood.

readyp1 6y ago

For those who want to read the filing/follow along with the case but don't have access to PACER (which is where the docket link in the tweet leads), CourtListener's RECAP archive [0] has this case listed already [1], and a kind soul has already uploaded this particular filing [2]. Hopefully, as the case develops, people with PACER access will continue to buy and contribute the filings to RECAP. [0] https://www.courtlistener.com/recap/ https://www.courtlistener.com/recap/ [1] https://www.courtlistener.com/docket/50143052/nelson-v-robinhood-financial-llc/ https://www.courtlistener.com/docket/50143052/nelson-v-robin... [2] https://www.courtlistener.com/recap/gov.uscourts.nysd.553175/gov.uscourts.nysd.553175.1.0_3.pdf https://www.courtlistener.com/recap/gov.uscourts.nysd.553175...

tareqak 6y ago

I wonder if the class action will broaden against all the brokers who took this same action instead of just Robinhood (~~I read others mention Interactive Brokers, TD Ameritrade, Charles Schwabb, Trade212 (thank you 'Avalaxy), and others, but I have no sources to point to myself~~ 'johnbrodie said that TDA and other blocked buying on margin). In that scenario, the plaintiffs and defendants could definitely simply interpreted by normal people to be something like “People of the United States vs. Wall Street”. Both mainstream and alternative/niche media would have a field day over this story. Is it really worth billions of dollars to further destroy the wavering belief that Americans still have about the American dream? How can you have any semblance of unity without evidence and/or faith that the powers that be in business and government will allow the ordinary person to have a realistic path towards tangible and meaningful prosperity?

johnbrodie 6y ago
Posted this in another thread, but TDA and other blocked buying on margin, not buying with your own money. Completely different IMO. Source: Their own statements and buying GME this morning on TDA without issue.
- tareqak 6y ago
  Thank you 'johnbrodie. I updated my message.
Avalaxy 6y ago
Trading212 also halted buying GME/AMC.
- tareqak 6y ago
  Thank you 'Avalaxy.