It asks the U.S. District Court for the Southern District of New York to order the immediate reinstatement of GameStop on Robinhood’s platform and requests a yet-to-be-determined award.<\/p>\n
The plaintiff, Brendon Nelson, is described in the complaint as a Robinhood customer who lost out on the opportunity to buy GameStop as its stock climbed higher.<\/p>\n
His lawyer, Alexander Cabeceiras, in a statement to CNBC said that “hundreds of individuals” are “reaching out to be added to this suit.”<\/p>\n
“Robinhood’s mission is to ‘democratize finance for all.’ They have failed,” Cabeceiras’ statement said. “They have purposefully failed this mission and failed their clients in an attempt to \u2014 what appears to be \u2014 appease their investors and\/or potential investors.”<\/p>\n
Robinhood did not immediately respond to a request for comment.<\/p>\n
The app’s recent interference in the surge of “short-squeeze” trading plays by small retail investors, many of whom coordinated through social media forums such as Reddit’s WallStreetBets page<\/a>, has prompted legal action from multiple users and attracted the attention of other law firms.<\/p>\n Another Robinhood user, attorney Richard Gatz, on Thursday filed a separate lawsuit against Robinhood in northern Illinois, claiming its decision to halt trades of BlackBerry, Nokia and AMC Theaters was made “to protect institutional investment at the detriment of retail customers.”<\/p>\n Gatz did not immediately respond to CNBC’s request for comment.<\/p>\n ChapmanAlbin LLC, a securities arbitration and class-action firm, said Thursday it is investigating<\/a> users’ claims of suffering losses as a result of Robinhood’s actions.<\/p>\n On Reddit, where users had discussed pumping stock prices of short-heavy companies, a new forum called r\/ClassActionRobinHood gained more than 20,000 members on the same day it was created.<\/p>\n The suits come amid a handful of eye-popping short squeezes. A short squeeze can occur when a rise in a security’s price forces those betting against the stock, known as short sellers, to cover their positions to prevent further losses.<\/p>\n When this occurs en masse, it can lead to a feedback cycle and a spike in a stock’s price.<\/p>\n Such has been the case for GameStop, which despite a 20% pullback on Thursday has seen its stock soar more than 1,000% over the last month. Short sellers have been forced to cover their bets against the stock as a group of retail investors bought the equity directly or via options known as calls.<\/p>\n As of Tuesday, equity shorts were down $91 billion<\/a> in January alone, according to S3 Partners.<\/p>\n