Vernon Litigation Group is submitting investor declare for arbitration with FINRA towards Robinhood Monetary, LLC and Robinhood Securities, LLC

Vernon Litigation Group is filing an investor claim for arbitration with FINRA (the regulator for the financial industry) against Robinhood Financial, LLC and Robinhood Securities, LLC

NAPLES, Florida., August 31, 2021 / PRNewswire / – Vernon Litigation’s lawsuit alleges Robinhood acquired Blackberry Ltd. (BB) Unjustifiably imposed trade restrictions earlier this year. Some of the details of the claim are given below.

Cyber ​​experts often caution against getting involved in anything that is offered “for free” in the high tech world, as it usually means you will be effectively pooled with others and turned into the product or service that is being sold or is to be otherwise exploited by the high-tech company. Robinhood is a great example of this abuse. Robinhood attracts customers by offering “free” services and in return Robinhood bundles its customers’ “free” trades and then sells the ability to make those trades to other financial firms who are paid to actually make the trades. Robinhood receives massive payments from these “major trading firms” or “electronic market makers” for the ability to receive customer order flow from Robinhood (“Payment for Order Flows”). While Robinhood claims this is a departure from the old way in which brokerage firms benefit from their own client base, paying for the flow of orders that Robinhood has enriched is a very traditional Wall Street practice.

Since Robinhood launched its “free” trading platform and introduced a new way of doing business, paying for order flow has been its largest source of income – with one market maker in particular, Citadel Execution Services, accounting for nearly half of the total payments made by Robinhood of All Market Maker received in 2020. Think of Robinhood as a middleman who takes the orders to trade from its clients, bundles them into many trades, and then gets paid by Citadel so that Citadel can actually execute those trades for a fee that comes from the proceeds of the trade.

The story goes on

With the above in mind, the shares of BlackBerry Ltd. To rise at the beginning of the year. This was due in part to Robinhood customers buying large numbers of shares in BB (and other heavily shorted stocks), which increased stock prices dramatically and resulted in what is known as a “short squeeze”. As share prices rose and losses were threatened, short holders began to close their short positions to avoid further losses and buy shares in case the broker who borrowed them demanded the shares back. This subsequently led to a further increase in the BB share price.

Several large hedge funds and Wall Street investment firms, including Citadel Enterprise Americas LLC, Citadel Securities LLC, and Melvin Capital Management LP (“Melvin Capital”), were among the investors who held significant short positions in BB. As a result, these hedge funds have faced dramatic potential losses as BB continued to rise due to trading with Robinhood clients and others. To protect these hedge funds (which paid massive sums of money to Robinhood for the flow of orders), Robinhood abruptly prohibited its own clients from buying stocks and exercising options from BB. Robinhood’s stop on BB was not a general stop, but a stop against buying that would put upward pressure on the BB stock market.

Given the nature of Robinhood’s relationship with Citadel and other short sellers, Robinhood was pursuing its own interests at the expense of its own clients. Indeed, Robinhood was pushing the market price in the direction it wanted to get for the benefit of Robinhood’s real customers (the hedge funds and other electronic market makers), at the expense of its “free” customers who exploited it on the traditional Wall Street fashion.

Due to the above allegations, among other things, the FINRA lawsuit is now being prosecuted against Robinhood.

Vernon Litigation Group is a financial litigation law firm with offices in Naples, Florida and Buckhead, Georgia represents clients in litigation, arbitration, including FINRA arbitration, negotiation and mediation throughout the process The United States. Our attorneys have represented hundreds of investors in financial disputes in arbitration and litigation nationwide, and have collected many millions of dollars from alleged financial professionals and financial institutions, both large and small. Please contact us to discuss your rights if you believe that a financial or investment professional has not acted in your best interests or has otherwise abused your trust in any insurance product or other investment product or service. For more information, visit our website or contact us by phone at 1-877-649-5394 or email at [email protected] to speak to a Vernon Litigation Group representative.

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Chris Vernon | 239-319-4434


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SOURCE Vernon Litigation Group

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