Robinhood agrees to settle customer lawsuit over 2020 outages
Reuters
Published May 27, 2022 17:34
Updated May 27, 2022 17:45
By Jody Godoy
(Reuters) - Robinhood Markets Inc (NASDAQ:HOOD) has agreed in principle to settle a proposed class action filed by customers in the United States who claimed the investment app's outages in March 2020 shut them out of trading on pandemic-related volatility.
The company filed notice of the pending deal with a San Francisco federal court on Thursday, saying it was resolving details of the agreement and would seek court approval of a settlement within 60 days. Court papers did not disclose how much Robinhood will pay to settle the action, which sought damages for a class of all U.S. users who held stock or options during a service outage on March 2, 2020.
The lawsuit also seeks damages for some users who lost money because of outages on March 2, 3 and 9, 2020.
A spokesperson for Robinhood declined to comment on Friday.
Robinhood shares were trading at around $10.38 on Friday afternoon, up around 11.9% from Thursday's close.
The Menlo Park, California-based company, which advertised itself as democratizing finance, rode a surge of interest in stock trading from retail investors during the pandemic, but has since faced legal challenges from users claiming the app did not live up to its promises.
The lawsuit in San Francisco alleges Robinhood outages caused users to lose money when they could not trade. The users accused Robinhood of negligence, breach of contract, violating California's fair business laws and other claims.
Other users sued after Robinhood temporarily restricted trading in January 2021 during a rally in Gamestop Corp, AMC Entertainment and other so-called "meme stocks." A judge dismissed the proposed class action in January, saying such restrictions were allowed under Robinhood's customer agreement.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.