US News Robinhood is facing nearly 50 lawsuits over GameStop frenzy

tom_mai78101

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Robinhood, the brokerage of choice for legions of online day traders, is in talks with securities regulators and other authorities over a host of matters, including last month’s surge in shares of GameStop and other so-called meme stocks.

The firm, in a regulatory filing on Friday, said it has received requests for information from federal prosecutors, the Securities and Exchange Commission, various states attorneys general and other financial regulators over its decision to restrict trading last month in stocks including GameStop.

The filing also said the Financial Industry Regulatory Authority, known as Finra, and the S.E.C. are investigating the firm’s options trading platform and how it displays information about options trading and cash positions to its customers. Robinhood has faced criticism over how its app displays information since the death last year of Alexander Kearns, a 20-year-old who killed himself because he thought he had incurred more than $700,000 in losses. Mr. Kearns’s family has filed a wrongful-death lawsuit against the brokerage.

Robinhood, a privately traded company with financial backing from several Silicon Valley firms, also disclosed other investigations, including an inquiry by Finra into a March 2020 outage that stopped some customers from accessing the firm’s trading platform on the web and its mobile app at a time of major market volatility as a result of the coronavirus.

Robinhood has become popular over the past several years with retail investors and fast-fingered day traders because of it does not charge commissions on trades, but last year it settled a case with the S.E.C. over its disclosures to customers about how it earned money.

 
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The Helper

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Come to find out that the company that buys Robin Hoods order flow is the same one that was shorting Gamestop so they literally had to make them stop trading so they triggered a market protection mechanism that raised the deposit requirement on Robin Hood and some other exchanges to do that. They still lost a shitload of money but at least it did not start a collapse. I am pretty sure it is going to be too complicated for someone like Maxine Waters to get to the bottom of though.
 
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