I've read a couple of the lawsuits on courtlistener. From what I've read, these lawsuits are going to go absolutely nowhere.
The biggest problem most of the lawsuits face is that there is a provision in the Terms of Service that basically says that Robinhood can prevent you from trading in any stock it wishes. Any complaint that amounts to "Robinhood violated its contract" is going to go down in flames as a result--it didn't violate its contract; the people who are complaining didn't read the contract.
That really only leaves two kinds of claims that might have legs: arguing that Robinhood violated securities laws, and arguing conspiracy on the part of hedge funds. The first part is difficult to win on because many of the complainants will simply lack the standing to do so (you have to have owned the stocks in question and bought/sold at a manipulated price to show standing, and since the complaints are generally on the theme of "we tried to buy but couldn't", they fail that) [1]. The last one might survive until discovery if properly pled, but I sincerely doubt they'll ever eventually win it.
[1] One of the cases filed for a temporary restraining order mainly on the basis of the complaint. The judge found that the briefing didn't even meet the "raises serious questions" burden of proof, although they mentioned that the TRO failed really hard at the "suffered irreparable harm" part because losing money is pretty much by definition a reparable harm.
Contracts do not override a broker's fiduciary duty to its clients. A fiduciary duty is the highest standard of care recognized by law and requires the agent to act in the best interest of the principal.
Once the evidence is presented, a plaintiff may find that Robinhood did not act with the highest standard of care, did not do everything it could have done to prepare for and handle the situation.
We don't know because the evidence hasn't been disclosed, a major part of any lawsuit is to give plaintiffs an opportunity to assess the evidence produced by the defendant to determine if any wrongdoing took place.
And the question will be posed if making it an absolute certainty that your customers lose value is a justified action because it reduces volatility. And RH will have a tough time arguing. “Yes, yesterday you had 2mil but you didn’t know if it would double or halve. Today you know for sure that you have 100k, so why aren’t you happy? I’m just looking out for your best interests!”
> They let their customers sell which was probably a fiduciary responsibility.
Given the context of gamestop's stock, only allowing to sell stocks is the exact opposite of protecting the customer's best interests.
I mean, the high demand for gamestop's stock was motivated by the rally behind a retail-backed short squeeze, where hedge funds were reported to have massively shorted gamestop's stocks. Barring customers from buying more gamestop stocks meant they were unable to strengthen their positions and thus profit from the short squeeze,and pushing them to sell represented a pressure to kill off the short squeeze, thus acting on the exact opposite of their customer's best interests.
Then there's the reported news that one of RobinHood's new backers ends up being one of the hedge funds that stood to loose massively due to this retail-backed short squeeze.
> Rh will argue best financiary duty was to protect his customers from the volatility
Wouldn't that line of argument determine that traders would have the fiduciary duty to only allow their clients to sell on price hikes and buy on price drops?
Because otherwise that line of reasoning is highly arbitrary in the sense of what RobinHood claims is in the best interests of his customer, and thus very unlike anything regarding fiduciary responsibility.
In short, no, not that I've seen. However, there also hasn't particularly been much of a reason to yet--there haven't been any motions that need argumentation, and the defense (Robinhood) hasn't responded yet to the cases.
One side-effect is the suits provide a lens on the parts of the T&Cs that retail investors do not like.
Court action (and senate hearings)have the ability to hold the publics attention under certain circumstances. Especially if there is a reviled antagonist, for which hedge funds are a good casting
You mean that somewhere in the huge Wall Of Text..err Terms of Service, they can say that they want my firstborn child for human sacrifice and once I click Accept, I am a goner ?
> That really only leaves two kinds of claims that might have legs: arguing that Robinhood violated securities laws, and arguing conspiracy on the part of hedge funds. The first part is difficult to win on because many of the complainants will simply lack the standing to do so (you have to have owned the stocks in question and bought/sold at a manipulated price to show standing, and since the complaints are generally on the theme of "we tried to buy but couldn't", they fail that)
Someone that owned GME shares could argue that by restricting buying but not selling shares, Robinhood was acting to lower the value of this asset. They might argue that in this situation the only fair thing to do is to restrict buying and selling altogether.
>Someone that owned GME shares could argue that by restricting buying but not selling shares, Robinhood was acting to lower the value of this asset. They might argue that in this situation the only fair thing to do is to restrict buying and selling altogether.
Whether that's fair is debatable. If you held GME shares and wanted to get out, but couldn't because robinhood restricted sells for no reason (ie. they couldn't execute buys because they couldn't put up the collateral, but they can still process sells because they don't need collateral for that), that can also be construed as unfair.
Robinhood is a brokerage, they are not the entire stock market.
Robinhood has 0 ability to prevent people from selling GME in the market at large.
It kind of feels like some people don't understand that Robinhood is only a gateway into a much larger system, and is fundamentally different than an "app/game" that controls the entire system on it's own servers.
The biggest problem most of the lawsuits face is that there is a provision in the Terms of Service that basically says that Robinhood can prevent you from trading in any stock it wishes. Any complaint that amounts to "Robinhood violated its contract" is going to go down in flames as a result--it didn't violate its contract; the people who are complaining didn't read the contract.
That really only leaves two kinds of claims that might have legs: arguing that Robinhood violated securities laws, and arguing conspiracy on the part of hedge funds. The first part is difficult to win on because many of the complainants will simply lack the standing to do so (you have to have owned the stocks in question and bought/sold at a manipulated price to show standing, and since the complaints are generally on the theme of "we tried to buy but couldn't", they fail that) [1]. The last one might survive until discovery if properly pled, but I sincerely doubt they'll ever eventually win it.
[1] One of the cases filed for a temporary restraining order mainly on the basis of the complaint. The judge found that the briefing didn't even meet the "raises serious questions" burden of proof, although they mentioned that the TRO failed really hard at the "suffered irreparable harm" part because losing money is pretty much by definition a reparable harm.