Robinhood Faces 90 Lawsuits as Congressional Hearing Looms

Robinhood CEO Vlad Tenev will testify before Congress on Thursday, explaining his platform's decision to abruptly suspend trading in GameStop along with other volatile stocks during a retail investment rush in January.

Reddit CEO and co-founder Steve Huffman, Citadel CEO Kenneth Griffin, Melvin Capital CEO Gabriel Plotkin and influential online trader Keith Gill are also set to testify before the US House Financial Services Committee.

The purpose of the Thursday hearing is to give the committee a much better sense of what occurred throughout the week of frenzied trading. Talking to CNBC, MP Securities analyst Devin Ryan predicted the hearing “will focus on understanding precisely what occurred throughout the week of service disruptions, making sure that all activity was appropriate as well as determining how to prevent an identical event later on.”

In the 3 weeks which have passed since Robinhood restricted exchanging several equities in the middle of the buying frenzy sparked by investment forum r/WallStreetBets, Robinhood continues to be sued a lot more than 90 times by investors claiming that the platform's actions were unlawful.

However, it is unlikely that many of the aggrieved investors will receive each day in court, as a clause in Robinhood's user agreement requires disputes brought by users to be settled in arbitration rather than the civil court system. There is potential for a class action lawsuit to maneuver forward regardless of this, because of US regulations.

During a job interview with Tesla CEO Elon Musk, Vlad Tenev described Robinhood's decision as necessary to meet clearinghouse deposit requirements, and never an effort to manipulate the market towards Wall Street short-sellers who were being squeezed.

Tenev dismissed claims that Robinhood's hand was forced by partner Citadel Securities as “getting into conspiracy theories”.