On Wednesday, Robinhood account holders filed their consolidated second amended complaint alleging that Robinhood Financial LLC, Robinhood Securities LLC, and Robinhood Markets Inc. committed negligence, breach of contract, breach of fiduciary duty, and violations of California’s Unfair Competition Law after system failures halted trading last year. The plaintiffs allege that e-trading platform’s several dozen outages locked users out of their accounts while the market made big gains, resulting in significant trader losses.
The Northern District of California complaint explains how the supposedly everyday-consumer friendly platform works and that its systems crashed due to lack of oversight procedures. According to the complaint, Robinhood takes responsibility for the outages. Notwithstanding the defendants’ explanations and apologies, the filing seeks to hold them accountable to a class of all Robinhood customers in the United States, or alternatively three narrower subclasses.
The amended complaint comes the same day that the popular retail brokerage was fined nearly $70 million by the Financial Industry Regulatory Authority for the 2020 outages and other misconduct. For the system crashes, the oversight body has forced Robinhood to pay more than $5 million in restitution. On July 1, the day after the amended complaint was filed, the company filed to go public.
Robinhood has 30 days to seek dismissal or answer the complaint.
The plaintiffs are represented by interim co-lead counsel Kaplan Fox & Kilsheimer LLP and Cotchett, Pitre & Mccarthy LLP, while Gibbs Law Group LLP is liaison counsel. Robinhood is represented by Farella Braun + Martel LLP and Debevoise & Plimpton LLP.