Gamestop Corporation (GME)

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Investors file CLASS ACTION SUIT against Robinhood over GameStop ‘stonk’ suppression

28 Jan, 2021 18:05 / Updated 15 hours ago

(R) © REUTERS/Chip East ©  REUTERS/Shannon Stapleton;  Robinhood via Google Play;  Facebook / Citadel Securities

A group of investors has filed a class action complaint against the online brokerage Robinhood, after it stopped all buys of GameStop and other stocks. They call it a market manipulation aimed to protect short-selling hedge funds.
According to the lawsuit, filed on Thursday before a federal judge in the Southern District of New York, Robinhood “purposefully, willingly and knowingly” deprived retail investors of the ability to invest, accusing the brokerage of “manipulating” the market.

Lydia Moynihan
@LJMoynihan
BREAKING: Class action complaint against @RobinhoodApp filed in the southern district of NY

https://ecf.nysd.uscourts.gov/doc1/127128425123
Robinhood “completely blocked retail investors” from buying GameStop stock “for no legitimate reason,” the lawsuit goes on to say, adding that the move appears to be calculated to benefit individuals and institutions who are not Robinhood customers but are “large institutional investors” into the company. 

The plaintiffs are asking for an immediate injunction to reinstate GameStop stocks on Robinhood’s platform, and unspecified damages and punitive fees. 

As the result of the block, GameStop stock fell from $469 a share on Thursday morning to only $126 by 11:20 am. It has since rallied back to $275 territory, but remains volatile. 
Robinhood customers woke up on Thursday to an announcement they were no longer able to buy stocks of GameStop (GMEA), AMC Theaters (AMC), Blackberry (BB) or Nokia (NOK). The four companies were targets of retail investors congregating on Reddit over the past several weeks.

These investors sought to drive up the stock price of the companies in order to punish hedge funds who had been “short-selling” them to make a quick profit. The rise in stock prices caused the funds to lose billions.
Short sellers reportedly lost $14.3 billion on Wednesday alone, with one fund, Melvin Capital, requiring nearly $3 billion in bailouts to avoid bankruptcy. One of the firms that bailed out Melvin Capital, Citadel Securities, also facilitates trades made on Robinhood, working as a sort of middleman between the app and Wall Street’s exchanges. 

Halting the buying – but not the selling – of the four companies’ stock meant that its price could only go down, thus helping the hedge funds. 

Robinhood
@RobinhoodApp
·
Jan 28, 2021
In light of current market volatility, we are restricting transactions for certain securities to position closing only, including $AMC and $GME. Read more here.

Keeping Customers Informed Through Market Volatility — Under the Hood
blog.robinhood.com

Logicality
@_Logicality
This will go down as the worst financial decision ever made by a brokerage.

RIP, enjoy the class action suit.
There were reports that other brokerages such as WeBull have also disabled buying of GameStop and other “stonks” – a Reddit meme reference to common people trying to profit from the stock market

Joe McCann
@joemccann
Replying to @joemccann
And the real winners have arrived, the lawyers.

A class-action lawsuit against Robinhood has been filed in the Southern District of NY

https://ecf.nysd.uscourts.gov/doc1/127128425123
While the retail investors may or may not have profited from buying stocks, the short-sellers are feeling the pain. GameStop stock surging by 1,000 percent appears to have inspired other retail investors into similar campaigns with other companies. Data analytics firm Ortex said Thursday that short-sellers have racked up $70.87 billion in losses just this month, with over 5,000 US firms holding losing shorts as of Wednesday. 

Stocks for me but not for thee: Redditors playing the stock market is problematic but, if a Democrat does it, no big deal

Micah Curtis
is a game and tech journalist from the US. Aside from writing for RT, he hosts the podcast Micah and The Hatman, and is an independent comic book writer. Follow Micah at @MindofMicahC
Accusations of fraud were thrown about when Redditors played the stock market and destroyed hedge funds. None were to be heard when Nancy Pelosi bought into Tesla after President Joe Biden announced his anti-fossil fuel policies.
People have been bidding money in the stock market for over a hundred years. There have been many stories about people substantially increasing their wealth by doing so. Despite some people's issues with Wall Street and the culture surrounding it, there's nothing illegal about getting involved in stock trading. In fact, most financial advisers will recommend it. However, when the subreddit r/wallstreetbets took to the market to make substantial short-term gain in a move that worked against hedge funds, there were cries to get the government involved.

What hasn't been reported-on nearly as much is that Joe Biden and John Kerry announced yesterday that the federal government plans to make moves that will severely damage the energy and automotive industries in the short term. Kerry himself has been criticized for a "learn to code" – almost the modern “let them eat cake” – attitude towards the people likely to lose jobs because of the Keystone Pipeline being halted. In the wake of this, no one is talking about Democrat House Speaker Nancy Pelosi investing substantially in Tesla. Tesla is one of the companies that seems like it could benefit greatly from what the executive branch wants to impose.

Just this morning, the app RobinHood, which is meant to allow people without substantial funds to get into the market, is now canceling the ability to purchase stocks that r/wallstreetbets were purchasing. Last night, I decided to get in on the fun and check to see what would happen. I purchased stock in both AMC entertainment and the Naked Brand Group and suddenly both purchases were canceled.
So a lowly journalist/comic book writer such as myself cannot play the market to increase his wealth but career politicians are allowed to? The way free market is supposed to work, my money is just as green as Nancy Pelosi's. If I want to purchase stock in a company and bet with or against the market I should be able to.

The response has been outright ridiculous. Looking through mainstream headlines, the Reddit investor crowd is being called “trolls” and a “mob,” and their behavior explained with “Trumpism.” Immediately a call was raised for stricter market regulation to prevent this from happening again.


That’s an abhorrent hypocrisy – especially considering how much dirtier it looks when Nancy Pelosi's longtime friends who just now happened to be in control of the executive branch tank a market while she invests money in the competition to improve her own wealth.

It’s quite simple. These big government types do not like to see people get out of  “their lane.” The instant that people beat the ‘elites’ on their own turf, by playing the market in a way the ‘elite’ cannot control or benefit from, there are calls for big government to get involved. On the flip side, no one says a word when actual industries get harmed and politicians get richer because of it. Where the heck is the standard?

As it stands, it’s looking like this battle is just beginning. The little guy is now hungry to play the game and make their life better. The big dogs who don't want the little guy to ever earn a seat at the table need to be held accountable. I mean, playing the market like this might benefit all of those people that are about to lose their jobs because of the Democrats. Is it so bad if they want to learn to trade?