Robinhood Faces Lawsuits Ahead of 2021 IPO
Trading app Robinhood is facing legal hurdles ahead as it prepares for what could be a single of the greatest IPOs of 2021.
What Happened: This 7 days, the household of Robinhood person Alex Kearns, who dedicated suicide right after racking up large losses on Robinhood, sued the enterprise, stating that its “reckless carry out directly and proximately prompted the loss of life of a single of its victims.”
Robinhood is also struggling with dozens of lawsuits related to its bans and restrictions of GameStop and other popular r/WallStreetBets shares in recent weeks right after the Reddit team drove a pump-and-dump limited squeeze that sent share costs skyrocketing.
Robinhood has stated that the backlash from the GameStop drama has not deterred its plans for heading community. Nevertheless the backlash from the investing restrictions may perhaps have harmed Robinhood’s status and valuation.
It may perhaps also make Robinhood’s stock a concentrate on for the identical retail traders who truly feel they were being handled unfairly by the enterprise all through the height of the limited squeeze.
Robinhood has stated it limited investing in sure shares in an endeavor to defend its shoppers.
A single scenario Robinhood was probable searching to stay away from is a further incident like the a single that is the topic of the Kearns lawsuit. The 20-12 months-aged student took his own daily life right after earning a elaborate selection trade and mistakenly believing he had racked up $730,000 in losses in his Robinhood account.
Kearns reportedly emailed Robinhood’s shopper help workforce to request for clarification but took his own daily life right after obtaining only vehicle-generated replies.
A Robinhood spokesperson told CNBC this 7 days: “We were being devastated by Alex Kearns’ loss of life. Because June, we’ve created advancements to our choices offering.”
Benzinga’s Consider: As of 2020, Robinhood was valued at about $eleven billion, but it is unclear how substantially the destructive press and person backlash bordering the GameStop fiasco may perhaps have impacted that price.
It’s also unclear how substantially of a grudge r/WallStreetBets and other traders will hold towards Robinhood’s stock if and when it goes community.
This story originally appeared on Benzinga.
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