https://www.ign.com/articles/robinhood-hit-with-class-action-lawsuit-after-halting-gamestop-stock
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Robinhood Hit With Class Action Lawsuit After Halting GameStop Stock
The suit says Robinhood is depriving investors access to an open
market.
Matt T.M. KimBy Matt T.M. Kim
Updated: 28 Jan 2021 7:44 pm
Posted: 28 Jan 2021 7:33 pm
Stock trading app Robinhood has been hit with a class-action lawsuit
after the app announced it will restrict trading on certain stocks
including GameStop and AMC.
In a suit filed in the Southern District of New York, the Plaintiff
claims that Robinhood "purposefully, willfully, and knowingly
removing the stock "GME" from its trading platform in the midst of an
unprecedented stock rise thereby deprived retail investors of the
ability to invest in the open-market and manipulating the
open-market."
Earlier this morning Robinhood began limiting certain stock trades on
its app, only allowing users to sell stock like GameStop and AMC, but
not buy them. Any attempts to purchase stock like GameStop's results
in a message that "This stock is not supported on Robinhood."
GameStop in the News Timeline
January 2016
GameStop expands its business beyond
retail and into game publishing by announcing a partnership with
Insomniac Games for Song of the Deep.
"We have 62 million
customers coming to our doors every year," said GameStop's Mark
Stanley of the company's decision to get into publishing. "How do we
give more and more content and more exclusives and different kinds of
games in our store, beyond just the traditional AAA, etc? We've
worked for many years with publishers on exclusives in our stores,
etc. This is a different way to bring added value to those customers.
We think it's a very good balance to maintain."
April 2016
A few months after partnering with
Insomniac, GameStop officially announces its own publishing label,
GameTrust. In addition to Song of the Deep, the label's games include
Deformers (Ready at Dawn), Has Been Heroes (Frozenbyte), The
Invisible Hours (Tequila Works), and Star Child (Playful Studios).
12 IMAGES
March 2017
With digital purchases on the rise, and the
continued growth of online retailers like Amazon, GameStop announces
plans to close 150 of its then-7,500 stores, according to USA Today.
Year-over-year global sales for the retailer drop 13.6%.
November 2018
GameStop reports a massive third-quarter
loss of $488.6 million USD.
January 2019
Following the massive third-quarter loss,
rumors of a buyout surface. Two companies, Sycamore Partners and
Apollo Global Management, are said to be vying for the retailer, with
the buyout expected to be completed by the end of the following
month.
January 2019
Three weeks after the buyout rumors
surface, GameStop announces it's no longer pursuing a buyer due to
"the lack of available financing on terms that would be commercially
acceptable to a prospective acquiror." The company's stock price
drops to its lowest point since June 2005.
GameStop stock has seen an unprecedented rise in price following a
short-selling squeeze performed by the hobbyist subreddit r/
WallStreetBets. These investors predicted a short on GameStop stock
and took the opportunity to purchase stock early and cheap, creating
a squeeze.
Responses to Robinhood's decision to halt trading on certain stocks
has been swift. Politicians like Rep. Alexandria Ocasio-Cortez (D-NY)
and Sen. Ted Cruz (R-TX) have both tweeted criticizing Robinhood's
actions, with the former announcing they will be appearing on Twitch
later today to discuss the situation.A screenshot of the Robinhood
app, displaying the "stock not supported" message.
A screenshot of the Robinhood app, displaying the "stock not
supported" message.
While hedge funds and Wall Street types have come out against the r/
WallStreetBets subreddit, IGN spoke with traders from the subreddit
who invested in GME. Many of who invested in GME as part of their
day-trading hobby.
Robinhood has not responded to the class-action lawsuit and has not
made any public statements since announcing its halt on certain
stocks it calls volatile.
---------------------------------------------------------------------
Matt T.M. Kim is a reporter for IGN.
Header Image: Justin Sullivan/Getty Images
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