Robinhood Gets Hit with Class Action Lawsuit

January 29, 2021

A new class action lawsuit filed in the Central District of California alleges that behemoth online brokerage, Robinhood, breached its duties to investors when it "willfully and knowingly" disabled certain crucial and basic trading functions crippling its clients' abilities to trade from their accounts.

The complaint alleges that Robinhood clients who owned, or sought to acquire, shares of Gamestop Corp (NYSE: GME), AMC Entertainment Holdings, Inc. (NYSE: AMC) and Blackberry, LTD (NYSE: BB), were damaged when Robinhood deliberately handcuffed their ability to trade, thereby benefitting Wall Street institutions.

New California Class Action Lawsuit Against Robinhood Alleges Online Brokerage "Sacrificed" Main Street Investors

According to the lawsuit, "Robinhood, famous as the champion of the small retail investor(…) Switched sides." The complaint further states that "Robinhood acted contrary to the interests of its clients and anointed itself as the overlord of the free market, opting to damage its clients in favor of its own financial interests and the interests of other market participants, many of whom had interests directly adverse to Robinhood's clients." The suit asserts causes of action for Breach of Fiduciary Duty, Negligence and Unfair Business Practices, among others.

The case is Gossett, et al. v. Robinhood Financial, LLC, et al Case No. 21-cv-00837. The Plaintiffs are represented by Maurice Pessah of Pessah Law Group, PC (PLG) and Stuart Chelin of Chelin Law Firm, two Los Angeles based law firms.