Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Investors should consider their investment objectives and risks carefully before investing. There is always the potential of losing money when you invest in securities, or other financial products. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market.
Explanatory brochure available upon request or at Please read important disclosures below:Īll investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Its backers include a high-profile group of VCs including Sequoia Capital, Andreessen Horowitz and DST Global, among others.– Robinhood Financial is a member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).
In September, the 7-year-old, San Francisco-based company increased its latest funding round to $660 million at a staggering $11.7 billion valuation. The company has been the subject of criticism in the past for “luring young traders, sometimes with devastating results,” as in this New York Times article. Robinhood had not responded to FinLedger’s request for comment as of press time. “But where is the liability? That negligence is the crux of this suit.”Įli Levy of Levy & Partners PLLC, one of the representing attorneys, said that the startup’s failure to advise account holders about the halting of trading in the Hertz stock led to potentially millions of dollars lost.
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That’s their business model,” MAC Legal’s Michael Citron, one of the representing attorneys, told FinLedger. “Robinhood assumed a duty to these customers, which it failed to abide by, and doesn’t hide the fact that it targets unsophisticated investors. In a conversation with the attorneys representing Pinchasov, they emphasized to FinLedger that part of the premise behind the lawsuit is that Robinhood on its own website claims that “deliberately engineered systems - not marble office buildings on Wall St - are the cornerstones of establishing trust.” 5, 2020, in the Miami-Dade County, Florida, Circuit Court. The Daily Business Review estimates those damages could be in the “millions” of dollars range but the attorneys declined to be specific, saying it was too early to say. The amount of damages is actually yet “unspecified,” according to the law firms representing Pinchasov.
The suit is seeking monetary damages in an amount that “exceeds $30,000,” according to the plaintiff’s attorneys, who said that dollar amount is a minimum threshold for filing in the Florida Circuit Court. The lawsuit alleges that “Robinhood breached its duty of care to its targeted customers by failing to prevent customers from using its interface for stocks that had been the subject of a T1 Halt and failing to provide those customers the knowledge of the T1 Halt.”
Once the Hertz Corporation T1 Halt was lifted, the market price of the stocks had dropped significantly, causing Pinchasov and others similarly situated “damages” as a result of Robinhood executing the pre-T1 Halt trades when they should have instead been cancelled, terminated or otherwise halted. Specifically, according to the lawsuit, Robinhood’s customers did not receive the basic information regarding the T1 Halt placed on the Hertz Corporation stock in March 2020, and as a result “lost significant sums of money.”
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A T1 Halt is a trade halt code representing when trade is halted on a particular company’s stock because that company is “pending the release of material news which is likely to lead to abnormal volatility in said company’s stock price.” And while the company’s app seems to have held up during recent market volatility, it seems that some users are unhappy with other aspects of Robinhood’s handling of its customers’ investment trades.įinLedger has learned of a new class action lawsuit filed by Shterna Pinchasov and on behalf of “those similarly situated” against Robinhood, alleging that the company failed to notify its customers about a T1 Halt. Securities and Exchange Commission and the Financial Industry Regulatory Authority are already investigating Robinhood’s handling of an outage in March, according to this Bloomberg piece, which also points out the buzzy startup has also been the target of many angry customers and regulatory probes. A new class-action lawsuit has been filed against Robinhood Financial, the commission-free stock trading startup.
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