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A Robinhood user filed a class action lawsuit against the platform on Thursday after it restricted trading of GameStop (GME) stock — which has soared in recent weeks thanks to the support of Reddit traders — causing it to lose much of its value today.
The complaint alleges that Robinhood’s action deprived users of taking advantage of potential gains as GameStop’s stock rose later in the day, as well as making it impossible for them to “short” the stock in case it drops. It also alleges that Robinhood customers have endured “substantial losses” because of the move, and claims the trading platform violated Financial Industry Regulatory Authority rules by denying users the opportunity to trade the stock.
“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, filed by Brendon Nelson, alleges.
Robinhood said in a statement Thursday that, “in light of recent volatility, we are restricting transactions for certain securities to position closing only.”
The company took similar actions for other stocks, including AMC (AMC), BlackBerry (BB), Nokia (NOK) and others, something the suit also takes issue with.
“Robinhood continues to randomly pull other securities from its app for no legitimate reason,” the complaint states.
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