Robinhood receives good news about being sued
When online trading platforms such as Robinhood and TD Ameritrade restricted or outright banned stock trading even at the height of the GameStop affair in January, users were pissed off and plaintiff lawyers were elated. Alas, their dreams of making these companies pay for allegedly colluding with Citadel or hedge funds or whatever. took some success.
The United States Court of Appeals for the Eighth Circuit on Friday dismissed a proposed class action lawsuit by investors who accused the brokerage of securities fraudâ¦. In Friday’s opinion, the judges did not weigh in on the merits of the plaintiffs’ allegations of fraud. Rather, they felt that it would be too difficult to determine which investors had been harmed by TD Ameritrade’s order routing practices.
“Too difficult” because the approach proposed by the Complainant to determine who’s been screwed up and by how much by TD Ameritrade’s practice – with just about everyone – to accept payment for the flow of traders’ orders at high speed, Citadel and the like – using giant, powerful computers – was dismissed by the court. Given the large number of trades involved, there is no other feasible option, and therefore no class action. Individual traders who feel sufficiently aggrieved can undertake their own investigation and gather evidence of their own alleged tampering and take legal action, finally, individually, if they wish.
Since the courts are unwilling to scare the brokerage houses by terminating the payment of the order flow, this will be up to Gary Gensler & co. to decide to intervene and stop the scourge of free trade for the masses.
To learn more about the latest trends in litigation, regulation, transactions and financial services, Register now for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.