Robinhood agrees to settle customer lawsuit over 2020 outages

Might 27 (Reuters) – Robinhood Markets Inc (HOOD.O) has agreed in precept to settle a proposed class motion filed by clients in america who claimed the funding app’s outages in March 2020 shut them out of buying and selling on pandemic-related volatility.

The corporate filed discover of the pending cope with a San Francisco federal court docket on Thursday, saying it was resolving particulars of the settlement and would search court docket approval of a settlement inside 60 days. Courtroom papers didn’t disclose how a lot Robinhood can pay to settle the motion, which sought damages for a category of all U.S. customers who held inventory or choices throughout a service outage on March 2, 2020.

The lawsuit additionally seeks damages for some customers who misplaced cash due to outages on March 2, 3 and 9, 2020.

A spokesperson for Robinhood declined to touch upon Friday.

Robinhood shares have been buying and selling at round $10.38 on Friday afternoon, up round 11.9% from Thursday’s shut.

The Menlo Park, California-based firm, which marketed itself as democratizing finance, rode a surge of curiosity in inventory buying and selling from retail buyers through the pandemic, however has since confronted authorized challenges from customers claiming the app didn’t stay as much as its guarantees.

The lawsuit in San Francisco alleges Robinhood outages brought on customers to lose cash once they couldn’t commerce. The customers accused Robinhood of negligence, breach of contract, violating California’s truthful enterprise legal guidelines and different claims.

Different customers sued after Robinhood quickly restricted buying and selling in January 2021 throughout a rally in Gamestop Corp (GME.N), AMC Leisure (AMC.N) and different so-called “meme shares.” A choose dismissed the proposed class motion in January, saying such restrictions have been allowed below Robinhood’s buyer settlement.

Reporting by Jody Godoy; Modifying by David Gregorio

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