Trading app Robinhood says facing US regulator inquiries

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SAN FRANCISCO, Feb 27, 2021 (BSS/AFP) – Stock trading app Robinhood on
Friday confirmed it is cooperating with inquiries from US regulators into its
decision to temporarily throttle purchases of shares in companies such as
GameStop during frenzied trading in January.

The free brokerage platform is facing inquiries from federal financial
regulators, state attorneys general and the US Congress, according to a
filing with the Securities and Exchange Commission.

Robinhood, which says it is “cooperating” with the entities, is already
facing dozens of class action lawsuits.

The lawsuits “generally allege breach of contract, breach of the implied
covenant of good faith and fair dealing, negligence, breach of fiduciary duty
and other common law claims,” Robinhood said in the filing.

“We believe that the claims in these lawsuits are without merit and intend
to defend against them vigorously.”

Key players in the GameStop shares trading frenzy told skeptical US
lawmakers last week that their actions were above board and in line with
ordinary stock market business.

Founders of Robinhood and the online forum Reddit were among those to
testify at a House of Representatives financial services committee hearing.

Unprecedented recent volatility — with shares in the GameStop video game
store surging more than 400 percent — prompted calls for regulators to
review the role of social media, hedge funds and trading platforms which some
allege manipulated the market.

The GameStop Wall Street upheaval was sparked via a “subreddit” known as
WallStreetBets.

“I am not trying to throw anyone under the bus,” Robinhood co-founder and
chief executive Vlad Tenev told the House committee meeting.

“All I can say is Robinhood played it by the books.”