Robinhood, the most well-known of the electronic stock trading platforms, battled a class action lawsuit from January 2021 regarding their alleged restriction of trading GameStop stock as the price skyrocketed. They weren’t alone – alongside Robinhood, other electronic stock trading platforms such as Webull, TD Ameritrade, and Charles Schwab, suffered class action lawsuits regarding their platforms’ response to the GameStop stock short squeeze.
Electronic stock trading platforms have attempted to level the stock trading game, as well as empower retail investors to involve themselves with their own investment trading opportunities. Commission-free trading, exchange trading funds, and cryptocurrencies have become so popular that even larger investment corporations have joined the game with their own platforms. However, this recent advancement in consumer availability has afforded these companies no shortage of litigation.
Robinhood, Webull, TD Ameritrade, and Charles Schwab operate some of the most commonly used electronic trading platforms.
Robinhood
At the time of this writing, Robinhood was involved in 263 legal proceedings over the past five years, with a high concentration of said legal proceedings occurring right around the GameStop stock short squeeze in early 2021. According to Robinhood’s website, Robinhood founders created the electronic trading platform with the intent to “provide everyone with access to the financial markets, not just the wealthy” and “democratize finance for all.”
Robinhood’s top three case types are contract, securities commodities and exchange, and fraud.
These case types include cases which refer to Robinhood’s alleged negligence and misrepresentation of their cyber protection of user’s personal identifiable information, Robinhood’s alleged stock options and prices manipulations, as well as their restricting user freedoms regarding GameStop stock and other “meme” stocks at the time,
The three law firms Robinhood relies most frequently on are Farella Braun + Martel, Cravath, Swaine & Moore, Hill Ward Henderson, and Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow.
Webull
According to the above Docket Alarm analytics, Webull hasn’t seen much litigation since 2021. Over the last five years, Webull has only seen 26 new legal proceedings. According to Webull’s website, the company is “… a financial company with the customer at heart, the internet as our foundation, and technology as our lifeblood.” Webull was established in 2017 and is owned by Fumi Technology, a Chinese holding company.
Webull’s most common case types are contract, antitrust, and securities commodities and exchange. Litigation from these groups involve class action lawsuits against Webull and others, regarding blocked “meme” stocks during the January squeeze.
Webull’s most used law firms are Lowenstein Sandler and Winget, Spadafora & Schwartzberg.
TD Ameritrade
According to the Docket Alarm analytics above, TD Ameritrade averages 1.9 legal proceedings a month, with a spike in legal proceedings around January 2021. TD Ameritrade was founded in 1971; and, in 2020, TD Bank Group sold TD Ameritrade to the Charles Schwab Corporation. Even more recently, in February of 2023, Charles Schwab began relocating customers to Schwab.
TD Ameritrade’s top case types are contract, antitrust, and securities commodities and exchange.Litigation from these groups involve class action lawsuits regarding blocked stocks during the January 2021 GameStop and other “meme” stock squeeze, as well as, negligence in fiduciary duty.
TD Ameritrade’s most relied on law firms are Greenberg Traurig, Kutak Rock, and K&L Gates.
Charles Schwab
According to the Docket Alarm analytics, Charles Schwab has faced 54 new legal proceedings over the last five years; a spike in which occurs during the January 2021 GameStop stock short squeeze. According to Schwab’s website, “Schwab was built around a simple idea: put the client first. Lots of companies say that, but we work to keep clients at the heart of everything we do by offering a better, more modern way to build and manage wealth.”
Charles Schwab’s most common case types are antitrust, patent, and contract. Litigation from these groups involves class action lawsuits against Charles Schwab and other relevant defendants for blocking stocktrade during the GameStop short squeeze, and patent infringement involving the use of smartphone app technology to access financial accounts and/or process financial transactions.
Charles Schwab’s most relied on law firms are Greenberg Traurig, Gillam & Smith, Gibson, Dunn & Crutcher.
All of these apps experienced some side effects of the retail trading boom, especially concentrated around the January 2021 GameStop short squeeze. Two years on, the world of retail investing – and the legal landscape around it – has changed permanently.