LOS ANGELES, Feb. 8, 2021 /PRNewswire/ -- Pessah Law Group, PC (PLG) and Chelin Law Firm, two of the first California firms to institute a nationwide class action against Robinhood, recently filed an amended complaint alleging ten separate claims against the now infamous online brokerage.
The revised lawsuit takes aim at Robinhood's terms of service, which some legal experts and scholars stated gave the online brokerage broad latitude to disrupt user accounts and trading. But lawyers representing the class disagree, and maintain that Robinhood's terms are "unconscionable," and thus unenforceable.
"It seems as though Robinhood's customer agreement seeks to reserve for the online broker the unfettered right to do as it pleases with users' accounts and trading instructions. There can't be a contract if one party is free to disregard its obligations without any consequences," said Maurice Pessah, one of the attorneys representing the Plaintiffs.
"The one thing Robinhood neither advertises nor draws any attention to whatsoever are the unconscionable terms and conditions in the Customer Agreement, or the illusory nature of any Robinhood obligations thereunder," reads the complaint.
According to Stuart Chelin, another of the attorneys representing the Plaintiffs, "the class action lawsuit is also based, in part, on alleged breaches of Robinhood's duties to exercise reasonable care in relation to the oversight and operation of its brokerage business while high volume trading in volatile stocks balloons on its platform."
The class action lawsuit also alleges that Robinhood owes its users various fiduciary duties, something that Robinhood has denied in at least one other recent 2020 class action lawsuit relating to "trading outages." The amended lawsuit, however, includes screenshots from Robinhood's website where fiduciary duty is explained to potential users and where Robinhood invites people to "sign up" and offers "free stock."
The lawsuit also takes note of the data that Robinhood sells to Wall Street institutions and the lucrative "order flow" agreements that Robinhood has with companies like Citadel, which bailed out Melvin Capital after that company was hard-hit by massive bets on short positions. Those same short bets backfired when legions of Robinhood users began to buy shares of GameStop and other stocks, which had been the topic of discussion on the popular Reddit page r/WallStreetBets.
The firms involved also launched a new website designed to facilitate onboarding of investors to the class action. "Let the people trade," FOR REAL, is the site's tagline.
If you believe you have suffered losses due to Robinhood's actions, or for other inquiries, please contact:
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SOURCE Pessah Law Group