A truck driver from the US may have set a precedent for wronged investors
The US Financial Industry Regulatory Authority (FINRA) ruled for commission-free trading platform Robinhood to pay a retail investor who lost money after the platform halted meme-stock buying last year.
On January 6, a FINRA arbitrator found Robinhood liable for $29,460.77 in compensatory damages to Jose Batista, a truck driver from the state of Connecticut – and retail investor. Batista filed a complaint with FINRA in May last year, claiming that he lost money on investments due to Robinhood’s decision to halt trading on several meme stocks in 2021.
Between January 28 and February 4 last year, Robinhood restricted users from buying certain stocks amid a social media-fueled rally, and curbed the number of shares investors could buy in some of the stocks. When the restrictions and limits were lifted, many stocks lost much of their value, enraging investors and sparking a wave of lawsuits accusing Robinhood of conspiring to trigger a sell-off.
Robinhood dismissed the accusations and argued that its moves were publicly announced and justified.
The ruling in Batista’s case is the first in which Robinhood has had to pay a retail investor for its trading restrictions – and some say it could set a precedent for other traders suing the $13 billion trading platform.
“FINRA showed here that they were willing to adjudicate a case on the merits,” Batista’s lawyer, Jorge Altamirano, told Market Watch, adding that “this opens the door for other investors to revisit that day [in January] and maybe take action.”
Seven other retail investors have filed complaints with FINRA against Robinhood regarding the meme-stock sell-off, but Batista’s case is the only successful one so far.
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