Retail Traders Sue Robinhood Over Meme Stock Restrictions
Retail traders in two U.S. states sued Robinhood Markets Thursday over its decision to prevent buy orders on GameStop (GME) and other so-called “meme stocks” swept up in the Reddit-fueled trading frenzy.
The separate suits slam Robinhood over a decision that had immediate repercussions for impacted shares. GameStop, which had been soaring for days on short squeezing and mass speculation, began tumbling downward after Robinhood, a major retail trading hub, implemented the hold.
Massachusetts resident Brendon Nelson alleged Robinhood tried to “slow the growth of GME” without legitimate cause, a move he said benefits Robinhood’s institutional investors over its clients in violation of its customer agreement. He filed a class action suit in New York federal court.
The other case, filed by Richard Joseph Gatz in Chicago federal court, alleged Robinhood “caused irreparable harm” to retail traders of Nokia, AMC Theaters and BlackBerry when it disabled buy orders Thursday, according to Bloomberg.
Robinhood did not immediately respond with comment.