Robinhood faces nearly 50 GameStop Frenzy lawsuits.
Robinhood, the broker of choice for legions of online day traders, is in talks with securities regulators and other authorities over a host of issues, including the soaring share of GameStop and other se – saying shares even last month.
The company, in a regulatory filing on Friday, said it received requests for information from federal prosecutors, the Securities and Exchange Commission, various state attorneys general and other financial regulators about its decision to restrict trading last month on actions, including GameStop.
The file also says the Financial Sector Regulatory Authority, known as Finra, and the SEC are investigating the company’s options trading platform and how it displays trading information. options and cash positions to its customers. Robinhood has been criticized for the way its app displays information since the death last year of Alexander Kearns, a 20-year-old who committed suicide because he believed he had suffered more than 700,000 dollars in losses. Mr. Kearns’ family has filed a wrongful death lawsuit against the brokerage.
Robinhood, a private company with financial backing from several Silicon Valley companies, also disclosed other investigations, including an investigation by Finra into a March 2020 outage that prevented some customers from accessing the platform. both web and mobile app trading. the high volatility of the market due to the coronavirus.
Robinhood has become popular in recent years with retail investors and fast-paced day traders because it does not charge commissions on transactions, but last year it settled a case with the SEC over its client disclosures. about how he made money.
The company said it faces at least four potential class actions for its disclosures about the fees it collects from other companies.
This revenue stream – called payment for order flow – has caught the attention of angry users after Robinhood curbed trading last month in GameStop and other actions that were taken in a retail frenzy. which briefly blew up the stocks of video game retailers.
In the regulatory filing, Robinhood revealed that it faces at least “46 putative class actions and three individual actions” over the trading restrictions.