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Lawsuits filed against the stock-trading app Robinhood will be tried in the Southern District of Florida, a move that may offer faster recovery for Robinhood users seeking justice for potential illegal trading restrictions. The Ferraro Law Firm and co-counsel Burstyn Law Firm were the only law firms in the country that advocated for consolidation and transfer of all Robinhood lawsuits to the Southern District of Florida.
Beginning on January 28, Robinhood blocked users from purchasing shares in GameStop, AMC, Nokia, and other stocks, citing “market volatility.” Some users have since filed lawsuits against Robinhood over the trading restrictions, alleging that the company halted purchases of stock shares in order to protect the interests of Wall Street institutions like Melvin Capital, rather than the interests of Robinhood’s smaller retail investors.
Prior to the trading restrictions, Melvin Capital had accumulated a large short position in GameStop stock. Shorting stock involves borrowing stock to sell, then purchasing the shares back and returning them to the original lender. In other words, when shorting stock an investor is betting that the stock price will fall. Reddit users in the group WallStreet Bets as well as retail and institutional traders took the opposite side of Melvin Capital’s short position and purchased large quantities of GameStop stocks. As a result, the price of GameStop stock soared to over $300 per share, a drastic increase from its $4 share price six months prior. Accordingly, Melvin Capital’s GameStop gamble simply failed.
Rather than allowing the free market to dictate the direction of GameStop stock, Robinhood, on the verge of going public, instead prioritized the interests of Wall Street investors, such as Melvin Capital, over those of smaller investors it claimed to represent.
This is an example of market manipulation at its worst. To prevent further manipulation from happening and to protect the interests of smaller retail investors, dozens of users have filed lawsuits against Robinhood and their co-conspirators.
Benefits of a Southern District of Florida MDL
On April 1, it was announced that dozens of Robinhood lawsuits would be consolidated and transferred to the Southern District of Florida. These lawsuits collectively seek billions of dollars in damages for alleged breach of contract, breach of fiduciary duty, and negligence.
“We want these cases to move quickly,” attorney Sean Burstyn said in an article for Law360. “Justice delayed is justice denied.”
Rather than multiple law firms separately investigating Robinhood’s potential illegal wrongdoing, consolidation allows them to share resources and evidence gathered during the discovery process. This helps to reduce legal costs and ultimately ensures a better legal representation.
After successfully advocating for the transfer, The Ferraro Law Firm is now positioned as one of the leading law firms in Robinhood trading restriction litigation, allowing it to better advocate on behalf of retail investors. While leadership positions have yet to be announced for the MDL, The Ferraro Law Firm will continue to advocate on behalf of all Robinhood users who were prevented from executing stock trades.
Advocating for the favorable transfer of Robinhood lawsuits to the Southern District of Florida is just one example of the lengths we will go to protect small investors. Fighting for regular people against powerful interests is our calling. The Ferraro Law Firm will continue to stand up for retail investors against a rigged financial system. Keep an eye on our blog for more news as the Robinhood case develops.