Zero-commissions brokerage Robinhood, already facing three lawsuits over trading glitches during the past two weeks, will likely face more legal troubles from angry customers who claim they couldn’t withdraw their money from the platform.
The first suit, filed in U.S. District Court, Middle District of Florida, Tampa Division on March 4, claims $5 million in aggregate damages as a result of glitches at the beginning of the month.
Robinhood — which has around 10 million customers — also faces a second suit filed on March 5 and a third suit filed on March 13. Both were filed in a federal court in California and both relate to the trading glitches, according to Ignites.
Some of Robinhood’s customers now claim that they weren’t able to transfer their accounts to other firms, lawyers who intend to represent them say, according to FA-IQ sister publication Ignites.
“We’ve been getting hundreds of e-mails about the class action from a variety of Robinhood users,” says Brandon Taaffe, an associate at Shumaker Loop & Kendrick who represents the plaintiff — his younger brother Travis Taaffe — in the first class action, according to Ignites. Some of the customers who contacted him say they’ve had trouble transferring accounts, according to Taaffe, the publication writes.
“At the stage to amend [the complaint], we’ll definitely add these allegations,” he says, according to Ignites. “They are similarly serious and similarly inappropriate in the industry.”
While it’s unclear how many customers were impacted by the account transfer issue, according to the publication, the Twitter account @ClassRobinhood that was set up after the March 2 glitch and claims to be actively building a class action against the firm had more than 8,000 followers as of Monday afternoon.
In addition, Andrew Stoltmann, a Chicago-based plaintiff’s lawyer, says he’s preparing Finra arbitration claims on behalf of a group of Robinhood investors, according to Ignites. Stoltmann is a past president of the Public Investors Advocate Bar Association.
California-based Gibbs Law Group, meanwhile, has posted a notice online that it’s investigating a possible lawsuit, offering a free case review to Robinhood customers, the publication writes.
Robinhood didn’t respond to Ignites’ request for comment.
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