On September 1, 2021, Robinhood ($Hood) filed its first amendment to its Form S-1 Registration Statement with the U.S. Securities and Exchange Commission (“SEC”).
The public filing, which amends the registration statement that Robinhood filed in connection with its July 2021 initial public offering (IPO), discloses that the SEC’s Division of Examinations and the Financial Industry Regulatory Authority (“FINRA”) have submitted inquires to Robinhood related to whether any employee executed trades in certain securities, including GameStop Corp. and AMC Entertainment Holdings, Inc., before the public announcement that Robinhood would restrict trading in those securities on January 28, 2021.
On Thursday, January 28, 2021, Robinhood designated specific stocks “position closing only,” restricting its customers from purchasing 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 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 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.
Now it appears possible that at least some Robinhood employees were able to execute trades in advance of the company’s public announcement that it would implement trading restrictions, potentially protecting themselves from the wreckage to come caused by their employer.
Investors who have been harmed should not feel discouraged. Many retail investors across the country are fighting back and filing lawsuits in the form of 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, amid an unprecedented rise in stock prices.
Recently, a 26-year-old truck driver from Connecticut, represented by Iorio Altamirano LLP, filed a securities arbitration claim alleging that Robinhood’s negligence caused the share prices of his stock positions to fall, causing significant financial loss.
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 or brokerage firm 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 advocate effectively on their behalf.
Iorio Altamirano LLP pursues individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.
Customers of Robinhood who suffered losses as a result of trading restrictions placed on January 28, 2021, are encouraged to contact Iorio Altamirano LLP using the following form for a free and confidential consultation. Iorio Altamirano LLP can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.
Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.