Last year GameStop (GME), along with several other unexpected companies now referred to as “meme stocks” exploded in value thanks to online movements and large efforts to swing their stocks’ value. Robinhood was an incredibly popular platform for trading, especially during this period. It was during this boom in meme stock trading that Robinhood began to restrict the ability to buy and sell certain stocks, much to the dismay of users. Now, a court decision may mean that Robinhood has to pay one particular user almost $30,000.
Jose Batista is a retail investor that used the Robinhood app to trade stocks like GameStop (GME) back in 2021. Batista claimed that he suffered an investment loss when Robinhood began to restrict trading on various meme stocks in January. Batista made an official claim with the Financial Industry Regulatory Authority in May of 2021. Now, FINRA has concluded that Robinhood is liable for $29,460.77 in damages and will have to compensate Batista accordingly.
Jose Batista explained in an interview with MarketWatch that he was originally planning to part with some of his stocks the day that Robinhood began to restrict trading options. “My plan was to sell Koss and Express that day,” he said. Koss and Express are two stocks that Batista specifically states he was intending to sell. He also owned a lot of GameStop (GME) stock at the time but said he had no intention of selling it that day.
Robinhood came under heavy fire last year over its handling of the GameStop (GME) short squeeze and the explosion in popularity of meme stocks. A year later, it continues to cause woes for the company. It will be interesting to see if more situations like this are on the horizon for Robinhood as it continues to face the consequences of its business behavior over the last year.
Donovan Erskine posted a new article, FINRA rules Robinhood is liable for damages to retail trader related to restricted trading in 2021