Arizona attorney scheduled to file class action after causing a stir over stock trading restrictions
Plaintiffs in the lawsuit say the stock trading app Robinhood essentially violated its Terms of Service, which promises an open market by restricting trading on GameStop.
PHOENIX – – The stock market was certainly shaken this week when a number of Reddit users bought call options on GameStop stock, causing that stock to hit levels it hasn’t been in years.
Since then, a trading app called Robinhood has had limited options to buy this stock, prompting some smaller investors to file class action lawsuits.
The story of Robin Hood is a classic one: stealing those from the rich and giving them to the poor. It’s a concept that Valley attorney Gabriel Vadasz says will most certainly not fly public.
“Volume drives everything, so people with hedge funds in a billions of dollars position can drive price in any direction they want,” Vadaz said.
This week a number of Reddit users got together to buy call options for GameStop. This caused stock prices to surge, reaching nearly $ 400 at the end of the day on Jan. 27.
Robin Hood then restricted trading in these stocks.
“Many smaller investors were injured as a result,” said Vadasz.
Vadasz has since initiated the class action lawsuit. One of the people joining the lawsuit is Austin Syr.
Syr says he himself tried to use the Robinhood app to buy shares in GameStop on Jan. 28. However, Syr was not allowed to do this.
“Her name is Robinhood. In order to have a situation where it is slightly opposite to her original intention, I wonder if this is a partner that can be trusted,” Syr said.
Robinhood officials have since announced that they will resume restricted purchase options on Jan. 29. Company officials have stated that they have put these restrictions in place only to meet broker-dealer capital requirements.