It’s in their TOS.
Their TOS says they can liquidate your holdings at any price they choose? I don't know if that's even legal. A TOS with illegal provisions is invalid. I'm pretty sure they have a fiduciary responsibility to their clients, which means they're fucked legally.
Their TOS says they can take “reasonable” actions to “protect” users. It’s nebulous enough they felt they could get away with it. But there is a lawsuit now so we’ll see for sure that the rich protect each other when the plebs get uppity.
Forcing their customers to lose money by driving the price of a stock down by forcibly liquidating their users' shares can't be interpreted as "protecting" those users by any reasonable person. I'm having a hard time understanding how it isn't blatant securities fraud. The discovery process of a lawsuit will allow investors to find out whether Robin Hood and other brokerages or their executives had any financial interest in manipulating the price of these securities.
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