- Robinhood’s IPO filing shows the company faces more than 50 legal complaints stemming from January’s meme-stock trading.
- Customers were angered by Robinhood’s move to temporarily stop users from buying certain stocks.
- Robinhood said it is cooperating with investigations by officials.
- See more stories on Insider’s business page.
Retail trading platform Robinhood is facing more than 50 lawsuits stemming from the restrictions it put in place to manage the trading mania in January surrounding so-called meme stocks, according to the company’s IPO filing.
Robinhood in its S-1 filing with the Securities and Exchange Commission on Thursday said it has become aware of about 50 putative class lawsuits and three individual actions that have been filed against it in various federal and state courts. It said two of the class action complaints have been voluntarily dismissed with prejudice.
The legal complaints follow Robinhood’s move in January of temporarily stopping users from buying shares of GameStop, AMC Entertainment and other stocks whose prices quickly soared as retail investors defended the shares from short-sellers.
“The complaints generally allege breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, breach of fiduciary duty and other common law claims,” Robinhood said in the SEC filing. It added that several complaints further allege federal securities claims, federal and state antitrust claims, and certain state consumer protection claims based on similar factual allegations. It said 19 of the putative class actions also name other broker-dealers or market makers as defendants.
The company said it’s being investigated by regulators including staff at the SEC and the antitrust division of the US Department of Justice. It said Vladimir Tenev, Robinhood’s co-founder and CEO, and others have received requests for information and testimony, subpoenas and that the US Attorney’s Office executed a search warrant to obtain Tenev’s cell phone.
“We are cooperating with these investigations and examinations,” Robinhood said.
The company on Wednesday agreed to pay nearly $70 million to settle claims by FINRA that the brokerage misled millions of customers, approved ineligible traders for risky strategies, and didn’t supervise technology that locked millions out of trading.