Read Blog
related attorneys
Related practice area
Within hours of reports that trading app Robinhood may have illegally halted buying shares of GameStop, AMC, and other companies to protect the short positions of Melvin Capital, while imposing losses on retail investors, The Ferraro Law Firm, in collaboration with Jeffrey Kwatinetz, Esq. and Sean Burstyn, Esq., took action on behalf of Robinhood customers who were not able to execute trades on stocks. This corrupt market manipulation harms ordinary citizens and broadly undermines faith in the financial system.
Anyone with an interest in financial news is likely familiar with the current situation involving Robinhood. To summarize, Robinhood’s creators and marketers targeted young and inexperienced investors when they released the investment app by highlighting its lack of transaction fees and ease-of-use.
On January 28, 2021, the company released the statement “Keeping Customers Informed Through Market Volatility.” It indicated that Robinhood was going to (at least temporarily) restrict trading on certain securities to position closing only trades. This essentially involves selling off a stock or closing a short position by buying a stock back. Additionally, Robinhood raised the margin requirements for the applicable securities.
This move was very clearly a response to a trend that began when a group of Reddit users decided to buy stock in GameStop to raise the price. In doing so, they would be betting against the positions of hedge funds who were planning on shorting the stock.
When someone is trying to short a stock, they want the price to go down. Shorting involves borrowing shares of a stock, selling them right away, and, when the price goes down, buying them back and returning them to the lender. The goal is to pocket the difference. However, shorting can be very risky. If the price of a stock goes up, the investor is on the hook for the difference, meaning theoretically, there’s no limit to how much money they could lose.
The investors who planned to short GameStop stock were aware of this risk. However, when their strategy didn’t pay off, rather than allow smaller investors to continue buying GameStop stock and other affected securities, Robinhood stepped in to protect the hedge funds. Although Robinhood’s statement indicates the company was claiming to have users’ best interests in mind, those who made this decision must have known that it would actually harm their customers’ positions and only benefit the company and their co-conspirators by preventing the price of these securities from rising even higher.
Robinhood’s leaders also claimed that they needed to temporarily halt trading of certain securities to raise capital. The company says this despite also claiming not to have any liquidity problems nor regulatory issues. Such inconsistency is a sure sign of negligence or even malicious intent.
Robinhood users have understandably reacted to these questionable business dealings with outrage. While Robinhood’s leaders can claim to support “the little guy” all they like, users only needed to point out Robinhood’s relationship with major hedge funds and investment firms to prove there is an obvious conflict of interest at play here. Robinhood’s true allies are the Wall Street titans that the company pretends to oppose. Thus, it is no surprise that Robinhood conspired with Point72, Citadel, and its subsidiary, Melvin Capital Management, to protect them.
This isn’t the first time Robinhood has abused user trust. A previous SEC investigation found that Robinhood was selling client order information to high-speed traders, preventing users from getting the best prices. Robinhood’s failure to disclose this practice resulted in the company being fined $65 million.
Robinhood and its co-conspirators must be held accountable. To that end, we at The Ferraro Law Firm have agreed to represent numerous plaintiffs in a class action case naming Robinhood and the company’s co-conspirators as defendants. Our goal: secure compensation for the plaintiffs, and expose Robinhood for what the company truly is. Fighting for regular people against powerful interests is our calling. We are standing up for retail investors against a rigged system. Keep an eye on our blog for more news as the case develops.
Featured Articles
our attorneys
James L. Ferraro
Founding Shareholder & President
Marc P. Kunen
Shareholder
James L. Ferraro, Jr.
Shareholder
Andrew J. Ferraro
Litigation Attorney
Angelica L. Novick
Partner
Daniel J. Di Matteo
Partner
The Hon. Leslie Rothenberg (Ret.)
Partner
Ignacio J. Segurola
Litigation Attorney
Client Experiences
When individuals and families face the challenges of mesothelioma and asbestos exposure—coping with complex treatments, escalating costs, and emotional strain—they turn to Ferraro Law for clarity, guidance, and steadfast support. Through meticulous case preparation, empathetic counsel, and strategic representation, our attorneys build compelling cases that secure meaningful settlements to cover medical expenses, provide financial relief, and offer a path toward stability during difficult times.
Stephanie and all the folks at the Ferraro law firm were professional and excellent in handling my case. Even more importantly they were very kind and treated me like family. I would wholeheartedly recommend them to anyone. Thank Y’all so much.
Matthew F.
Working with Daniel J. Di Matteo, Attorney and Partner at The Ferraro Law Firm was and is a life-changing forever experience. He is committed to a level of professionalism and attention to detail that is at the 100th percentile. Daniel handled everything with calmness, sensitivity and support that I needed through this difficult time. He always protected me and had my best interests. I am completely satisfied with the results.
If you need an attorney that operates at the highest level, that attorney is Daniel J. Di Matteo.
Harvey W.
Ferraro Law is wonderful and I am forever grateful to them. My attorney Daniel Di Matteo fought like a tiger for me against a multibillion dollar corporation and obtained a substantial settlement for me. This settlement is life changing for me. If you need an attorney call Ferraro Law and if you’re lucky Daniel will take your case.
Florence T.
Not too long ago I picked up the phone and called the Ferraro Law Firm not quite knowing what to expect. From the moment I reached out, the team made me feel heard and taken care of — not just like another case walking through the door.
Nikki Hurtado was my first primary contact. After speaking with her I knew that I had picked the right firm. She walked me through the process in plain understandable language. Even after numerous calls, she never made me feel like I was asking too many questions, and I always felt confident that my case was in expert hands.
My litigator was Daniel Di Matteo. If there was ever anyone that you would want by your side in a court of law, it would be him. He was everything that you would want in an attorney—calm, cool, always prepared, communicative and most importantly–experienced. He knew everything that was going to happen before it occurred but was prepared for any contingency. He is a fantastic attorney.
What really set them apart was their communication. I was kept informed at every stage — no chasing down updates, no wondering what was happening with my case. Calls and emails were returned promptly, and they proactively reached out whenever there was a development.
The professionalism of the entire team — from the attorneys to the support staff — was exceptional. Everyone I interacted with was kind, compassionate, and genuinely invested in my well-being, not just the outcome of my case.
And the outcome? Better than I could have hoped for. They fought hard on my behalf and secured a result that truly reflected the impact this injury had on my life.
You could ask for no better firm or attorney.
Keeth K.
Free Case Consultation
Our Trial and Appellate Attorneys Are Ready to Fight for You
If you were seriously injured, remember that it is crucial to choose the right law firm to represent your interests. We have been doing this for more than 40 years, and have the resources you need to challenge any opponent!
