A class action complaint filed last week against online brokerage firm Robinhood accuses the company of manipulating the open market after it removed GameStop’s stock from its trading platform in the midst of volatile trading last month. GameStop (ticker symbol GME), a struggling retailer of video games and accessories, saw its stock rise almost 1,700% in one day as small investors drove up the price of the stock as part of an effort encouraged by the Reddit page Wall Street Bets (see full NYT coverage here). The Southern District complaint is one of 30 cases across the country, reports Law360.
According to the complaint:
On or about January 27, 2021 Robinhood, in order to slow the growth of GME and deprive their customers of the ability to use their service, abruptly, purposefully, willfully, and knowingly pulled GME from their app. Meaning, retail investors could not longer buy or even search for GME on Robinhood’s app. Upon information and belief, Robinhood’s actions were done purposefully and knowingly to manipulate the market for the benefit of people and financial [institutions] who were not Robinhood’s customers.
The complaint contains claims for breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, and breach of fiduciary duty.
The case is pending before Judge Furman.