SARASOTA — Michael Taaffe, with the law firm Shumaker, has filed a class-action lawsuit against trading app Robinhood for allegedly preventing its members from trading GameStop shares on Jan. 28.
The lawsuit, filed in the Middle District of Florida, seeks more than $5 million dollars in damages. The lead plaintiffs in the lawsuit, according to the court filing, are three investors, including one, Kevin Sheehan, from Sarasota.
The lawsuit comes after shares for GameStop closed at an all-time high Jan. 27. According to a press release, when the market opened the next day, Robinhood shut down trading of the stock to its 10 million customers, citing market volatility despite other competing broker-dealers continuing to execute trade orders.
At the time Robinhood shut down transactions, GameStop was trading for about $445 per share. During pre-market hours on Jan. 28, shares of GameStop began to drop precipitously, falling to as low as $263 per share, the release says. When the market opened, GameStop rapidly rose from $263 to a peak of $483 per share within a span of 30 minutes.
“Robinhood chose to deny its customers access to the marketplace despite profiting off the customers who it lured in under the promise of market participation,” says Taaffe, who is based in Sarasota, in the statement. “Robinhood’s negligent failures are all the more serious given the company’s history of such breakdowns including last year during the biggest single day point gain in the history of the Dow Jones Industrial Average.”
Shumaker is asking Robinhood customers damaged by the outage to learn more about the class action lawsuit by emailing the law firm.
“The restrictions put in place by Robinhood fly in the face of the principles the company promoted to its own customers through its marketing materials and agreements,” says Taaffe. “In short, Robinhood breached its obligations and was negligent in allowing this to happen — all at the expense of its customers.”
The release also says Shumaker was the first firm in the country to file a class-action suit last March against Robinhood over the trading app’s outage.
Founded in 1925, Shumaker provides legal and legislative services with a team of more than 270 lawyers and advisors. The firm has seven offices, located in Toledo and Columbus, Ohio; Tampa and Sarasota; Charleston, S.C.; Charlotte, N.C., and Bloomfield Hills, Mich.