SARASOTA, Fla. - A Tampa Bay law firm is joining a barrage of lawsuits against the Robinhood stock trading app, saying it improperly stopped investors from trading shares of GameStop during last week's surge.
Millions of amateur traders tried to force professional short sellers to take a loss.
"[Robinhood] failed in their fundamental promise to their clients," said lawyer Brandon Taaffee of Shumaker, Loop & Kendrick.
The suit he filed is one of dozens against Robinhood. It's on behalf of a Sarasota resident and two others in Florida and California.
He says it should be considered more than just an app that can decide who uses it and when. He says they should be covered by rules brokers follow.
"[They] are a client and a customer of a FINRA registered broker, dealer, so their duties of care and obligations to you, as a customer, are significantly different than if you are just using an app," Taaffee said.
Robinhood, which bills itself as being on a mission to democratize finance for all, cited "volatility" in blocking those trades.
It wrote on its website that blocking certain trades was needed to comply with requirements that they store a certain amount of money with a clearinghouse to cover their trades.
Its user agreement says they may, at any time, restrict the trading of certain securities.
"It is too early to tell exactly what they did or didn't do," said Taaffe, "but hopefully they continue to improve their capabilities to service their clients."
This lawsuit is for $5 million. There is no date for any court appearances yet.
The first step is to determine whether all the class action suits that have been filed should be heard as one case.