5 ms·

How will this lawsuit get around the binding arbitration clause in their customer agreement? https://cdn.robinhood.com/assets/robinhood/legal/Customer%20Agreem

by Nacdor 6y ago

How will this lawsuit get around the binding arbitration clause in their customer agreement? https://cdn.robinhood.com/assets/robinhood/legal/Customer%20Agreement.pdf https://cdn.robinhood.com/assets/robinhood/legal/Customer%20...

findthewords 6y ago
I would imagine that this lawsuit is about the motive behind it.
mattnewton 6y ago
I am not a lawyer and I haven’t fully parsed the complaint but the class might be defined as anyone who owned GME and suffered damages or something like that, so not necessarily robinhood customers.
- jcranmer 6y ago
  The class is all Robinhood customers, or alternatively, all Robinhood customers who tried to buy GME but couldn't.
abduhl 6y ago
If it doesn't, does Robinhood really want to go to arbitration with all of WSB? I wonder who pays the upfront cost for the arbitrator?
- Nacdor 6y ago
  I had the same thought because DoorDash was once pummeled with arbitration fees by angry drivers, and it looks like Robinhood doesn't specify who pays the fee. I'm assuming that leaves the burden on the consumer, but maybe their arbitrator (FINRA) has some rule I'm missing.
- fastball 6y ago
  There are actually law firms that specialize in arbitration at scale. Customers: "We want to sue you." Company: "Sorry you can't do a class-action, we have a binding arbitration clause." Law firm representing customers: "Ok, here is the paperwork for 1500 arbitrations, have fun with that. We can do this all day."
lr1970 6y ago
Very simple. In a lawsuit they will claim market manipulation and SEC rules violations that are not covered by the binding arbitration. I hope we are not in the situation when a mafia guy shakes you down and makes you sign a contract to settle any grievances that you have with their mafia boss.
en4bz 6y ago
If they go through arbitration they'll end up like DoorDash [1]. [1] https://www.latimes.com/business/story/2020-02-11/doordash-arbitration-blunder https://www.latimes.com/business/story/2020-02-11/doordash-a...
- Nacdor 6y ago
  DoorDash had an arbitration clause that said they would pay the filing fee. Robinhood doesn't have that in their arbitration clause. As far as I can tell, they don't specify who pays but it's possible the arbitration agency (FINRA) has some law governing that I guess. If not, it's probably safe to assume the consumer has to pay the fee.
  - jonwachob91 6y ago
    Remember when Robinhood tried opening checking accounts the first time and made a bunch of claims about SIPC insured and what not, and then the SIPC was all like "We told Robinhood we don't insure checking accounts", and then the FDIC was all like "Robinhood never talked to us about opening, or insuring, any checking accounts"... Seems like something any financial lawyer would have checked the box on prior to making a HUGE announcement, so it's pretty plausible that Robinhood has no ideas about FINRA's laws about arbitration... [1] https://www.forbes.com/sites/ronshevlin/2019/01/02/the-robinhood-checking-account-was-doomed-to-fail/ https://www.forbes.com/sites/ronshevlin/2019/01/02/the-robin...
TimPC 6y ago
If they rule it doesn’t get around binding arbitration then there is no method for Robinhood to aggregate cases and they might face the costs of having 25,000+ cases to deal with.

by Nacdor 6y ago

findthewords 6y ago

I would imagine that this lawsuit is about the motive behind it.

mattnewton 6y ago

I am not a lawyer and I haven’t fully parsed the complaint but the class might be defined as anyone who owned GME and suffered damages or something like that, so not necessarily robinhood customers.

jcranmer 6y ago
The class is all Robinhood customers, or alternatively, all Robinhood customers who tried to buy GME but couldn't.

abduhl 6y ago

If it doesn't, does Robinhood really want to go to arbitration with all of WSB? I wonder who pays the upfront cost for the arbitrator?

Nacdor 6y ago
I had the same thought because DoorDash was once pummeled with arbitration fees by angry drivers, and it looks like Robinhood doesn't specify who pays the fee. I'm assuming that leaves the burden on the consumer, but maybe their arbitrator (FINRA) has some rule I'm missing.
fastball 6y ago
There are actually law firms that specialize in arbitration at scale. Customers: "We want to sue you." Company: "Sorry you can't do a class-action, we have a binding arbitration clause." Law firm representing customers: "Ok, here is the paperwork for 1500 arbitrations, have fun with that. We can do this all day."

lr1970 6y ago

Very simple. In a lawsuit they will claim market manipulation and SEC rules violations that are not covered by the binding arbitration. I hope we are not in the situation when a mafia guy shakes you down and makes you sign a contract to settle any grievances that you have with their mafia boss.

en4bz 6y ago

If they go through arbitration they'll end up like DoorDash [1]. [1] https://www.latimes.com/business/story/2020-02-11/doordash-arbitration-blunder https://www.latimes.com/business/story/2020-02-11/doordash-a...

Nacdor 6y ago
DoorDash had an arbitration clause that said they would pay the filing fee. Robinhood doesn't have that in their arbitration clause. As far as I can tell, they don't specify who pays but it's possible the arbitration agency (FINRA) has some law governing that I guess. If not, it's probably safe to assume the consumer has to pay the fee.
- jonwachob91 6y ago
  Remember when Robinhood tried opening checking accounts the first time and made a bunch of claims about SIPC insured and what not, and then the SIPC was all like "We told Robinhood we don't insure checking accounts", and then the FDIC was all like "Robinhood never talked to us about opening, or insuring, any checking accounts"... Seems like something any financial lawyer would have checked the box on prior to making a HUGE announcement, so it's pretty plausible that Robinhood has no ideas about FINRA's laws about arbitration... [1] https://www.forbes.com/sites/ronshevlin/2019/01/02/the-robinhood-checking-account-was-doomed-to-fail/ https://www.forbes.com/sites/ronshevlin/2019/01/02/the-robin...

TimPC 6y ago

If they rule it doesn’t get around binding arbitration then there is no method for Robinhood to aggregate cases and they might face the costs of having 25,000+ cases to deal with.