26-year-old Truck Driver from Connecticut Files Securities Arbitration Claim Against Robinhood for Placing Trade Restrictions on certain “Meme Stocks”

A 26-year-old truck driver from Connecticut, represented by Iorio Altamirano LLP, filed a securities arbitration claim alleging that Robinhood’s decision to halt the purchase of securities by retail investors caused the share prices of publicly traded companies that he held to fall, resulting in losses.

The claim stems from Robinhood’s January 28, 2021 decision to designate specific stocks as “position closing only,” meaning that customers could not purchase additional shares in those stocks.  The targeted stocks included GameStop (NYSE: GME), AMC (NYSE: AMC), Blackberry (NYSE: BB), Nokia (NYSE: NOK), Koss Corporation (NYSE: KOSS), and Express, Inc. (NYSE: EXPR).

Robinhood was joined by other online brokers, including TD Ameritrade, Charles Schwab & Co, Inc, Interactive Brokers, LLC, Webull Financial, LLC, E*Trade Securities LLC, who all implemented trading restrictions on targeted securities.  These online brokerage firms, including Robinhood, intentionally deprived their customers, without notice, of the ability to use their service in order to slow the growth of the targeted “meme stock” securities.

As the trading restrictions were put into place by the online brokerage firms, including Robinhood, retail investors watched helplessly as the value of their positions plummeted with no potential to remediate the positions given the wrongful sale pressure initiated by Robinhood and others.

Many retail investors felt cheated and wronged by the actions of these brokerage firms, particularly Robinhood, which has held itself out as a brokerage firm for all.  Front and center on its website, Robinhood declares that it believes that “the financial system should be built for everyone.”  That could not be further from the truth.

Now, many retail investors across the country are fighting back and filing securities arbitration complaints to recover losses from Robinhood as a result of its unprecedented decision to place trading restrictions on stocks of publicly traded companies on January 28, 2021, in the midst of an unprecedented rise in stock prices.

What is Securities Arbitration?

Arbitration is an alternative dispute resolution process. When an investor suffers investment losses due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated.  Arbitration is the primary forum for resolving disputes between investors and brokerage firms because it is a contractual obligation. The customer and broker-dealer contractually agree to use arbitration to resolve disputes when the customer opens a brokerage account and signs the customer agreement that includes an arbitration clause.  To read more about securities arbitration, click here.

How to Recover Financial Losses or Obtain a Free Consultation

Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who understands the FINRA forum and can navigate the arbitration process to effectively advocate on their behalf.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.

If you have suffered financial losses, please fill out the following form for a free and confidential consultation.  You may be entitled to compensation without payment of any out-of-pocket fees or costs through a contingency fee arrangement.

How is an Arbitration Claim Different Than a Class Action?

A securities arbitration complaint is brought by an individual against a brokerage firm.  The person who brings the claim (the Claimant) has complete control over settlement decisions.  If the dispute is not settled, an arbitration panel will hear evidence and decide whether the brokerage firm is liable to the Claimant.  The arbitration panel will also determine how much, if any, monetary damages are owed to the Claimant.

A class action complaint is a lawsuit filed in court by an individual on behalf of all like suited individuals. Individuals who are not class representatives do not have input on settlement decisions.  Class actions can be dismissed for various reasons, and even if there is a recovery someday, class members often only receive pennies on the dollar.


See Also:

Takeaways from Robinhood’s IPO Filing

Investor Alert: Iorio Altamirano LLP Investigates Robinhood for Failing to Exercise Due Diligence Before Approving Options Accounts

Breaking News:  Robinhood Ordered to Pay $70 Million, the Largest Financial Penalty Ever Ordered by FINRA

Retail Investors Fight Back Against Robinhood for Its January 28, 2021, Trading Restrictions on “Meme Stocks,” Such as GameStop, AMC, Koss Corporation, and Express, Inc.

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