Infotech

Scholars turn on Robinhood after GameStop purchases suspended



Posted on Jan 29, 2021, 1:07 p.m.Updated Jan 29, 2021, 1:08 PM

For stock marketers engaged in a merciless struggle against short sellers, this is a betrayal. Robinhood, the emblematic broker of the “zero commission” revolution, champion of “finance for all”, suspended purchases of GameStop shares and a dozen other titles Thursday. The broker has since lifted some of its restrictions, but for many of its users, the damage is done. Calls to turn against Robinhood have flooded the Reddit “WallStreetBets” forum. Politicians also got involved, criticizing the broker’s decision and calling for commissions of inquiry in Congress.

Several clients have already lodged a complaint against the brokerage application, in particular via a class action. But the chances of success of these lawsuits are extremely low. Online brokers are careful to specify in their terms of use that they can restrict transactions in certain securities at any time. And Robinhood imposes an arbitration clause on its users, which prohibits them from taking legal action against the broker before going to an arbitration court, bodies often biased in favor of companies.

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