UNITED STATES DISTRICT COURT
`
`SOUTHERN DISTRICT OF NEW YORK
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`_______________________________________________________X
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`BRENDON NELSON,
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`Plaintiff,
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`-against—
`
`,
`ROBINHOOD FINANCIAL LLC,
`,
`ROBINHOOD SECURITIES, LLC,
`
`ROBINHOOD MARKETS, INC.,
`
`Civil Docket No.: 21-cv-777
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`CLASS ACTION
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`COMPLAINT
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`Defendants.
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`Plaintiff Demands a
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`Trial by Jury
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`_______________________________________________________X
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`NATURE OF THE ACTION
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`1. Robinhood is an online brokerage firm.
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`2. Robinhood purposefully, willfully, and knowingly removing the stock “GME” from its
`trading platform in the midst of an unprecedented stock rise thereby deprived retail
`investors of the ability to invest in the open-market and manipulating the open-market.
`
`3. Plaintiff Brendon Nelson was and is a citizen of the Commonwealth of Massachusetts.
`
`PARTIES
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`4. Defendant Robinhood Financial LLC is a Delaware corporation with its principal place of
`business at 85 Willow Road, Menlo Park, California 94025. It is a wholly-owned
`subsidiary of Robinhood Markets, Inc. Robinhood Financial LLC is registered as a
`broker-dealer with the US Securities & Exchange Commission (“SEC”). Defendant
`Robinhood Financial LLC acts as an introducing broker and has a clearing arrangement
`with its affiliate Defendant Robinhood Securities, LLC.
`
`5. Defendant Robinhood Securities, LLC is a Delaware corporation with its principal place
`of business at 500 Colonial Center Parkway, Suite 100, Lake Mary, Florida 32746. It is a
`wholly owned subsidiary of Defendant Robinhood Markets, Inc. Defendant Robinhood
`Securities, LLC is registered as a broker-dealer with the SEC. Defendant Robinhood
`Financial LLC acts as a clearing broker and clears trades introduced by its affiliate
`Defendant Robinhood Financial.
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`

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`6. Defendant Robinhood Markets, Inc. is a Delaware corporation with its principal place of
`business at 85 Willow Road, Menlo Park, California 94025. Defendant Robinhood
`Markets, Inc. is the corporate parent of Defendants Robinhood Financial LLC and
`Robinhood Securities, LLC.
`
`7. The above-named corporate defendants herein referred to collectively as “Robinhood.”
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`JURISDICTION AND VENUE
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`8. This Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. §
`l332(d)(2). The aggregate claims of all members of the proposed class and subclass(es)
`are in excess of $5 million, exclusive of interest and costs, and there are more than 100
`putative class members. Many members of the proposed class are citizens of a state
`different from Defendant.
`
`9. Pursuant to 28 U.S.C. § 1391, this Court is the proper venue for this action because a
`substantial part of the events, omissions, and acts giving rise to the claims herein
`occurred in this District where Robinhood, distributed, marketed, advertised, and sold the
`trading services which are the subject of the present complaint. Finally, venue is
`appropriate in this District pursuant to 28 USC § 1391(b)(2) because a substantial part of
`the acts and omissions that gave rise to this Complaint occurred or emanated from this
`District.
`
`10. This Court has personal jurisdiction over Robinhood because it is authorized to do
`business and does conduct business in New York, and because it has specifically
`marketed, advertised, and made substantial sales in New York, and has sufficient
`minimum contacts with this state and/or sufficiently avails itself of the markets of this
`state through its promotion, sales, and marketing within this state to render the exercise of
`jurisdiction by this Court permissible.
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`FACTUAL ALLEGATIONS
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`11. Robinhood is an online brokerage firm. Its customers place securities trades through the
`firm’s website, by using a web-based application (or “app”). Robinhood permits
`customers to purchase and sell securities, including futures contracts.
`
`l2. Robinhood has experienced significant growth as a relatively new online brokerage firm.
`In 2019, Robinhood raised $323 million in funding at a $7.6 billion valuation. The firm
`markets itself primarily to younger investors and claims over 10 million users of its
`trading app.
`
`13. On or about March 23, 2016, Robinhood’s official Twitter account stated: “Let the people
`trade.” They have since disregarded their mantra and have blocked access for millions of
`its customers to trade particular securities.
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`

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`14. On or around January 11, 2021, stocks in GameStop Corp. (“GME”) began to rise.
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`15. At that time, Robinhood allowed retail investors to trade GME on the open market.
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`16. On or about January 27, 2021 Robinhood, in order to slow the growth of GME and
`deprived their customers of the ability to use their service, abruptly, purposefully,
`willfully, and knowingly pulled GME from their app. Meaning, retail investors could no
`longer buy or even search for GME on Robinhood’s app.
`
`17. Upon information and belief, Robinhood’s actions were done purposefully and
`knowingly to manipulate the market for the benefit of people and financial intuitions who
`were not Robinhood’s customers.
`
`18. Since pulling the stock from their app, GME prices have gone up, depriving investors of
`potential gains.
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`19. Additionally, in the event GME goes down, Robinhood has deprived investors of
`“shorting” GME in the hopes the price drops.
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`20. In sum, Robinhood has completely blocked retailer investors from purchasing GME for
`no legitimate reason, thereby depriving retailer investors from the benefits of
`Robinhood’s services.
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`21. The Financial Industry Regulatory Authority (“FINRA”), which governs brokers like
`Robinhood, espouses rule 5310 regarding “Best Execution and Interpositioning.” Rule
`5310.01 requires that Robinhood “must make every effort to execute a marketable
`customer order that it receives promptly andfully.” By failing to respond at all to
`customers’ placing timely trades—and outright blocking customers from trading a
`security—Robinhood has breached these, among other, obligations and caused its
`customers substantial losses due solely to its own negligence and failure to maintain
`adequate infrastructure.
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`22. Robinhood continues to randomly pull other securities from its app for no legitimate
`reason.
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`23. Upon information and belief, Robinhood is pulling securities like GME from its platform
`in order to slow growth and help benefit individuals and institutions who are not
`Robinhood customers but are Robinhood large institutional investors or potential
`investors.
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`Plaintiff’5 Experience
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`24. On the morning on January 28, 2021, Plaintiff used his Robinhood app, searched for
`GME on Robinhood’s app, and found it was unavailable. The stock did not even appear,
`although GME is a publicly traded company available on all other platforms.
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`25.
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`26.
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`27.
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`28.
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`29.
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`30.
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`31.
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`Thus, Plaintiff, like so many others, lost out on all earning opportunities.
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`CLASS ACITON ALLEGATIONS
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`Plaintiff brings claims pursuant to Federal Rule of Civil Procedure 23 on behalf of the
`following Class, as defined below:
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`All Robinhood customers within the United States.
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`Additionally, or in the alternative, Plaintiff brings claims pursuant to Federal Rule of
`Civil Procedure 23 on behalf of the following Subclass, as defined below:
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`All Robinhood customers within the United States who were not able to execute
`
`trades on GME after Robinhood knowingly, willfully, and purposefully removed it
`completely from their platform.
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`Excluded from the Class are the Robinhood entities and their current employees, counsel
`for either party, as well as the Court and its personnel presiding over this action.
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`This action has been brought and may properly be maintained as a class action against
`Robinhood pursuant to the provisions of Federal Rule of Civil Procedure 23.
`
`Numerosity: The precise number of members of the proposed Class is unknown to
`Plaintiff at this time, but, based on information and belief, Class members are so
`numerous that their individual joinder herein is impracticable. Based on information and
`belief and publicly available reports, Class members number in the hundreds of
`thousands and up to ten million. Subclass members are likely in the thousands. All Class
`and Subclass members may be notified of the pendency of this action by reference to
`Robinhood’s records, or by other alternative means.
`
`Commonality: Numerous questions of law or fact are common to the claims of Plaintiff
`and members of the proposed Class. These common questions of law and fact exist as to
`all Class members and predominate over questions affecting only individual Class
`members. These common legal and factual questions include, but are not limited to the
`following:
`
`a. Whether Robinhood knowingly failed to provide the financial services that were
`needed to handle reasonable consumer demand, including trading securities that are
`available on every other competitive trading platform;
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`b. Whether Robinhood failed to provide the duty of care to their customers when they
`purposefully removed GME;
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`c. Whether Robinhood removed GME purposefully to harm their customers” positions
`in GME and benefit their own potential financial gains;
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`d. Whether Robinhood violated FINRA Rule 5310, among other FINRA rules, state
`rules, and federal regulations;
`
`6. Whether Robinhood violated consumer protection laws in failing to disclose that its
`services would not include the ability to trade on GME, and other securities, for
`substantial periods of time;
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`f. Whether Robinhood was in breach of its legal, regulatory, and licensing requirements
`by failing to provide adequate access to financial services;
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`g. Whether Robinhood was in breach of its contracts and/or the implied covenant of
`good faith and fair dealing in connection with its failure to provide financial services;
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`h. Whether Robinhood was negligent or grossly negligent by failing to provide financial
`services in a timely manner due to its own possible nefarious desires;
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`i. Whether Robinhood breached its fiduciary duties to customers by failing to provide
`adequate access to financial services;
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`j. Whether Robinhood was unjustly enriched by its conduct;
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`k. Whether Plaintiff and the other Class members were injured by Robinhood’s conduct,
`and if so, the appropriate class-wide measure of damages, restitution, and other
`appropriate relief, including inj unctive relief.
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`1. Whether Plaintiff and the other Class members are entitled to injunctive and
`declaratory relief
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`32.
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`33.
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`34.
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`Typicality: The claims of the named Plaintiff are typical of the claims of the proposed
`Class in that the named Plaintiff was a customer during the class period and was unable
`to trade GME and place time-sensitive trades on GME and sustained damages as a result
`of Robinhood’s wrongful conduct.
`
`Adequate Representation: Plaintiff will fairly and adequately represent the interests of
`the Class in that he has no conflicts with any other Class members. Plaintiff has retained
`competent counsel experienced in prosecuting complex class actions, including those
`involving financial services, and they will vigorously litigate this class action.
`
`Predominance and Superiority: There is no plain, speedy, or adequate remedy other
`than by maintenance of this class action. A class action is superior to other available
`means, if any, for the fair and efficient adjudication of this controversy. Prosecution of
`separate actions by individual Class members would create the risk of inconsistent or
`varying adjudications, establishing incompatible standards of conduct for the Defendant.
`Additionally, given the relatively modest damages sustained by most individual Class
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`members, few, if any, proposed Class members could or would sustain the economic
`burden of pursuing individual remedies for Robinhood’s wrongful conduct. Treatment as
`a class action will achieve substantial economies of time, effort, and expense, and provide
`comprehensive and uniform supervision by a single court. This class action presents no
`material difficulties in management.
`
`35. Class action certification is warranted under Fed. R. Civ P. 23(b)(1)(A) because the
`prosecution of separate actions by individual members of the proposed Class would
`create a risk of inconsistent or varying adjudications with respect to individual Class
`members, which may produce incompatible standards of conduct for Defendants. 34.
`Class action certification is warranted under Fed. R. Civ P. 23(b)(1)(B) because the
`prosecution of separate actions by individual members of the proposed Class would
`create a risk of adjudications with respect to individual Class members which may, as a
`practical matter, be dispositive of the interests of the other members not parties to the
`adjudications or substantially impair or impede their ability to protect their interests.
`
`36. The prerequisites to maintaining a class action for injunctive or equitable relief pursuant
`to Fed. R. Civ. P. 23(b)(2) are met as Robinhood has acted or refused to act on grounds
`generally applicable to the Class, thereby making final injunctive, declaratory, or
`equitable relief appropriate with respect to the Class as a whole. 36. Class action
`certification is also warranted under Fed. R. Civ P. 23 (b)(3) because questions of law or
`fact common to the Class members predominate over any questions affecting only
`individual members, and a Class action is superior to other available remedies for the fair
`and efficient adjudication of this controversy. The amount of damages available to the
`individual Plaintiff is insufficient to make litigation addressing Robinhood’s conduct
`economically feasible for most in the absence of the class action procedure.
`Individualized litigation also presents a potential for inconsistent or contradictory
`judgments, and increases the delay and expense to all parties and the court system
`presented by the legal and factual issues of the case. By contrast, the class action device
`presents far fewer management difficulties and provides the benefits of a single
`adjudication, economy of scale, and comprehensive supervision by a single court.
`
`37. Class action certification is also warranted under Fed. R. Civ P. 23(c)(4) because
`questions of law or fact common to the Class members may be certified and decided by
`this Court on a class Wide basis.
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`CAUSE OF ACTION I
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`For Breach of Contract
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`38. Plaintiffs hereby incorporate by reference the factual allegations set forth
`above.
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`

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`39.
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`40.
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`41.
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`42.
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`43.
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`44.
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`45.
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`46.
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`47.
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`48.
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`49.
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`In order to use the Robinhood trading platform, a potential customer must enter into the
`Customer Agreement with Robinhood.
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`Plaintiff and all class members did enter into a Customer Agreement with Robinhood.
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`Robinhood breached its Customer Agreement by, among other things, failing to disclose
`that its platform was going to randomly pull a profitable stock from its platform; that
`Robinhood failed to provide adequate explanation to their customers; that Robinhood
`knowingly put their customers at a disadvantage compared to customers who used other
`trading apps; that Robinhood failed to provide access to its own financial incentives to
`pull certain securities including GME; that Robinhood’s prohibited plaintiffs from
`performing in a timely manner (or at all) under the contract; that Robinhood failed to
`comply with all applicable legal, regulatory, and licensing requirements; and that
`Robinhood failed to exercise trades and actions requested by customers.
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`As such, Robinhood breached its Customer Agreement with Plaintiff and Class members.
`
`Robinhood’s failure to perform and its breaches of the Customer Agreement resulted in
`damages and losses to Plaintiff and Class members and continues to expose them to harm
`because Robinhood continues to fail to perform under the Customer Agreement. These
`losses reflect damages to Plaintiff and Class members in an amount to be determined at
`trial or separate proceedings as necessary.
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`Breach of the Implied Covenant of Good Faith and Fair Dealing
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`CAUSE OF ACTION II
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`Plaintiffs hereby incorporate by reference the factual allegations set forth above.
`
`Plaintiffs and members of the Class and Subclass entered into the Customer Agreement
`with Defendant Robinhood to open a Robinhood trading account. They agreed to
`Robinhood’s Terms and Conditions by using Robinhood’s website and trading platform.
`
`Plaintiffs and members of the Class and Subclass fulfilled their obligations under these
`contracts by adhering to their terms and using Robinhood’s trading services through its
`website and trading platform.
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`Robinhood was obligated to provide the trading services required under those contracts at
`all times, including but not limited to, trades for GME.
`
`When initially signing up for Robinhood, Plaintiff and all those similarly situated could
`and most actually did trade GME.
`
`Robinhood unfairly interfered with the rights of Plaintiffs and members of the Class and
`Subclass to receive the benefits of the Customer Agreement by, among other things, (i)
`failing to provide services necessary to carry out a trade; (ii) failing to provide certain
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`trading services whatsoever; (iii) failing to inform individuals in a timely member of the
`drastic changes in trading abilities; and (iv) prohibiting plaintiffs from buying GME for
`Robinhood’s own pecuniary interest and not disclosing those interest to Plaintiffs and all
`Class and Subclass members.
`
`Robinhood’s conduct has caused Plaintiffs and members of the Class and Subclass harm,
`losses, and damages. These losses reflect damages to Plaintiffs and members of the Class
`and Subclass in an amount to be determined at trial or separate proceedings as necessary.
`
`CAUSE OF ACTION III
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`Negligence
`
`Plaintiffs hereby incorporate by reference the factual allegations set forth above.
`Robinhood had a duty to exercise reasonable care in conducting and facilitating
`transactions for its customers.
`
`Robinhood had a duty to exercise reasonable care in providing trades on the free, open
`market for its customers.
`
`Robinhood unlawfully breached its duties by, among other things, (i) removed GME
`without notice from its trading app; (ii) failed to provide financial services related to
`GME; (iii) failing to notify customers in a timely manner of the GME “blackout.”
`
`Robinhood’s conduct as set forth in this Complaint was want of even scant care, and its
`acts and omissions were and continue to be an extreme departure from the ordinary
`standard of conduct. Their actions breach any duty of care to their customers, but are also
`inconsistent with the standard of care expected from similar firms in the open market.
`
`Upon information and belief, no institutions similar to Robinhood has ever outright
`banned customers from purchasing a specific share of a specific security.
`
`Robinhood essentially abandoned its customers altogether by pulling GME, a standard of
`care so far below what is required for a business engaging in time sensitive trading
`services that it amounts to a complete abandonment of its duties.
`
`Robinhood’s grossly negligent and wrongful breaches of its duties owed to Plaintiffs and
`members of the Class and Subclass proximately caused losses and damages that would
`not have occurred but for Robinhood’s gross breach of its duty of due care. These losses
`reflect damages to Plaintiffs and members of the Class and Subclass in an amount to be
`determined at trial or separate proceedings as necessary.
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`50.
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`51.
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`52.
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`53.
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`54.
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`55.
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`56.
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`57.
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`CAUSE OF ACTION IV
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`Breach of Fiduciary Duty
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`58.
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`Plaintiff hereby incorporates by reference the factual allegations contained herein.
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`59. As a licensed provider of financial services, Robinhood at all times relevant herein was a
`fiduciary to Plaintiff and Class members and owed them the highest good faith and
`integrity in performing its financial services on their behalf. Robinhood also acted as a
`fiduciary to each and every customer who agreed to the Customer Agreement.
`
`60. Robinhood breached its fiduciary duties to Plaintiff and Class members by, among other
`things, failing to disclose that its platform was going to remove GME purchases in a
`timely manner; actually removing GME; removing GME for its own pecuniary benefits;
`that Robinhood failed to provide access to its financial services in a timely manner; that
`Robinhood failed .to comply with all applicable legal, regulatory, and licensing
`requirements; and that Robinhood failed to exercise trades and actions requested by
`customers in a complete and timely manner (also required by FINRA Rule 5310).
`
`61. Robinhood’s conduct has caused Plaintiff and Class members’ harm, losses, and damages
`and continues to expose them to harm because Robinhood continues to breach its
`fiduciary duties. These losses reflect damages to Plaintiff and Class members in an
`amount to be determined at trial or separate proceedings as necessary.
`
`RELIEF REQUEST:
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`1. Enter an immediate injunction requiring Robinhood to reinstatement GME on their
`trading platform;
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`2. Enter an award for plaintiffs to be determined;
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`3. Enter an award for attorneys fees and costs;
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`4. Enter an award for punitive damages for the willful, wanton, and reckless behavior of
`Defendants;
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`5. Any other relief this Court deems just and fit.
`
`Date: January 28, 2021
`
`Respectfully,
`
`Alexander G. Cabeceiras, Esq.
`One Penn Plaza, Suite 4905
`
`New York, New York 10119
`
`