Wherever there’s public outrage, a lawsuit is never far behind.
Robinhood has since relaxed restrictions on trading,
thousands of individual investors are now joining
a class-action suit against Robinhood.
The suit alleges the app “deprived customers of the ability to use their service” so it could “manipulate the market for the benefit” of the fat cats on Wall Street.
This is a David and Goliath story at its core, with small-scale Reddit day traders in one corner and cash-heavy Wall Street suits in the other.
But this lawsuit won’t help Redditors ‘stick it to the man.’
Robinhood’s lawyers aren’t stupid. They drafted the T&C’s
to make clear the company isn’t obligated to let you do whatever you want. It can block, cancel, restrict transactions – even delete customer accounts – on a whim with zero repercussions.
every person that has signed up to use Robinhood has agreed, whether they know it or not, to an arbitration clause
that says: “all parties are giving up the right to sue each other in court.”
So, probably not a successful case.
The point of the case, though, isn’t to win. It’s to publicize an uneven playing field.
For the last year, investors have been inflating companies like Tesla, Shopify and Snap to prices that don’t make sense when you look at the actual earnings prospects of these companies, per the New Yorker
. When professionals play – and win -
this game, it’s okay. But when individuals band together and start winning, institutions throw their toys out of the pram.
We’re living in a society where social media has decentralized markets, politics, and everything in between. Individuals who swarm together now wield more power than ever before, and lawmakers are at a loss at how, or if, they should regulate this.
The NYT said
“No one knows how this ends