Ever since Robinhood halted trading on meme stocks like GameStop and AMC last month, things have been even more difficult for the trading platform.
After facing online hatred, Senate hearings, and backlash from a slew of other scandals over the past couple of years, Robinhood is now faced with 49 lawsuits. That’s right, 49 — all because of GameStop. The trading platform made a filing with the SEC on Friday, stating that it was being hit with “46 putative class actions and three individual actions.”
The company has received requests for information from the SEC, states attorneys general, financial regulators, and federal prosecutors over the trading restrictions it imposed on the meme stocks. The SEC and Finra are both investigating Robinhood’s app display, which some customers say doesn’t list information about options trading and cash positions clearly.
Robinhood’s past scandals are also worth noting in light of the lawsuits. In March 2020, as the stock market tanked due to the beginning of COVID lockdown, the platform shut down for some users in an apparent outage. It was just one of a handful of outages that left day traders livid.
One trader, 20-year old Alexander Kearns, committed suicide last year because of the app. Kearns mistakenly thought that he had amassed $700,000 in losses in a single day, despite the fact that some trades had not cleared yet, meaning that Kearns didn’t owe the total amount. Kearns’s family filed a wrongful-death lawsuit earlier this month, blaming the app display.
Robinhood’s co-founder and CEO, Vlad Tenev, has had a busy month doing damage control, making an appearance during a Senate hearing on the GameStop craze. This week, he even chatted with Barstool Sports founder and day trading guru Dave Portnoy, a known ringleader of Robinhood’s legions of ex-fans. Now that these lawsuits have been made public, Tenev will have even more damage control to do.
