(HorizonPost.com) – The Robinhood app allows individuals the convenience of trading via their phones while avoiding many fees associated with speculating in the stock market. The company now finds itself embroiled in at least 30 class-action lawsuits for their part in a situation that potentially cost their users a lot of money.
Days after Robinhood restricted stock buys for GameStop, users across the US have filed dozens of lawsuits against the company demanding it pay up in damages. https://t.co/uarn7vfPry
— PCMag (@PCMag) February 4, 2021
Several hedge fund managers attempted to short sell video game retailer GameStop stock. A short sale is a complex strategy that can make investors money when a stock value drops. In this case, experienced traders locked horns with a group calling itself “wallstreetbets” (WSB), whose aim was to see the company reinvent itself. WSB caused an astronomical rise in the per-share price through their trading activity, and that’s when it all went sideways.
The value of those assets rose by a factor of almost 20 between January 5th and 27th of 2021. Many people wanted to sell them to make a profit, but they couldn’t because Robinhood blocked its users from doing so for GameStop and other companies that were experiencing similar growth. Now, they’re facing lawsuits because app executives prevented individuals from selling.
As of February 4, all restrictions were lifted, but it’s likely too little, too late for Robinhood clients.
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