Investing app Robinhood is facing legal hurdles in advance as it prepares for what could be a single of the major IPOs of 2021.
What Happened: This 7 days, the family members of Robinhood consumer Alex Kearns, who dedicated suicide immediately after racking up significant losses on Robinhood, sued the company, stating that its “reckless carry out straight and proximately caused the death of a single of its victims.”
Robinhood is also dealing with dozens of lawsuits connected to its bans and constraints of GameStop and other well-known r/WallStreetBets stocks in latest months immediately after the Reddit group drove a pump-and-dump brief squeeze that sent share prices skyrocketing.
Robinhood has mentioned that the backlash from the GameStop drama has not deterred its options for heading public. But the backlash from the buying and selling constraints could have broken Robinhood’s popularity and valuation.
It could also make Robinhood’s inventory a target for the exact retail traders who experience they had been dealt with unfairly by the company through the top of the brief squeeze.
Robinhood has mentioned it limited buying and selling in selected stocks in an endeavor to guard its customers.
A single situation Robinhood was most likely looking to avoid is one more incident like the a single that is the issue of the Kearns lawsuit. The 20-calendar year-outdated scholar took his have daily life immediately after building a elaborate alternative trade and mistakenly believing he experienced racked up $730,000 in losses in his Robinhood account.
Kearns reportedly emailed Robinhood’s consumer aid group to question for clarification but took his have daily life immediately after acquiring only auto-created replies.
A Robinhood spokesperson told CNBC this 7 days: “We had been devastated by Alex Kearns’ death. Because June, we’ve created advancements to our possibilities giving.”
Benzinga’s Get: As of 2020, Robinhood was valued at about $eleven billion, but it is unclear how much the destructive press and consumer backlash bordering the GameStop fiasco could have impacted that price.
It is also unclear how much of a grudge r/WallStreetBets and other traders will maintain toward Robinhood’s inventory if and when it goes public.
This story originally appeared on Benzinga.
© 2021 Benzinga.com. Benzinga does not offer expenditure advice. All rights reserved.