Robin Hood Facing 30 Lawsuits Over Shutting Down Trading

( – Last week, a group on Reddit arranged to drive up the stocks of several struggling companies. Chief among them was GameStop. Days prior to the January 27 event, GameStop shares sold below $20 per share. After the r/WallStreetBets message board targeted the ailing firm, its stock price shot up to $347.51 by the close of trading. The Reddit group stated they were attempting to counter Wall Street hedge funds about to make billions from short-selling the stock. It worked.

Much of the trading was done on the popular stock app Robinhood, which shut down the trading of GameStop shares. Users could hold on to the stock or sell it, but could not purchase more shares.

The actions of Robinhood have now triggered at least 30 lawsuits. The suits allege that Robinhood hurt potential gains “for no legitimate reason.” However, the company says it had to restrict purchases to allow for clearinghouses to catch up with the purchase requests, according to federal regulations.

What’s the truth? It will be up to the courts to decide.

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