Robinhood Financial LLC Class Action Lawsuit Order Flow Image
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Robinhood Financial LLC (Order Flow)

Class Action
  • Active
Investigation
06/30/2019
Initial Lawsuit
12/23/2020
Lawsuit Progression
04/12/2021

Investigation

Did Robinhood mislead consumers and fail to disclose that its operations relied extensively upon “payment for order flow,” in which it received payment from market makers in exchange for executing the service’s trades, at the expense of customers?

This post is open for investors to gather facts, and findings and track their exposure to related lawsuits. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.

A lawsuit was subsequently filed. We will update this post as it unfolds.

  • Investigation Date
    06/30/2019
  • Hypothetical Transgression
    Securities Violation

Initial Lawsuit

First Complaint - 12/23/2020

A Robinhood user filed a class action on behalf of all people in the United States or its Territories who were users of Robinhood between September 1, 2016, and June 30, 2019, and who placed orders in connection with which Robinhood’s received payment for order flow.

  • Filing Date
    12/23/2020
  • Class Period
    09/01/2016 to 06/30/2019
  • Transgression
    Securities Violation
  • Filing Firms
    Liddle & Dubin, P.C.
    Ahdoot & Wolfson, P.C.
  • Case Title
    Lemon v. Robinhood Financial LLC
  • Docket Number
    3:20-cv-09328
  • Court
    California Northern District Court
  • Free File
    Complaint

Allegations

Excerpt

“Through a process of deceit and omission, Defendants misled consumers and failed to disclose that Robinhood’s business operations relied extensively upon “payment for order flow,” in which Defendants received payment from market makers in exchange for executing the service’s trades.
These payments often came at the expense of the consumer. While Defendants promoted and advertised an easy-to-use “commission free” trading platform, Defendants profited extensively from unsuspecting consumers who executed trades on Defendants’ platform at inferior execution prices compared to what consumers would have received from Robinhood’s competitors. For larger value orders, this price differential often exceeded the commission its competitors would have charged. These inferior prices were caused in large part by the unusually high charges Robinhood required from principal trading firms for the opportunity to obtain Robinhood’s customer order flow.”

Defendants

  • Company
    Robinhood Financial LLC
  • Company
    Robinhood Securities, LLC

Lawsuit progression

  • Docket Number
    4:20-cv-09328
  • Court
    California Northern District Court

Lead Counsel

04/12/2021

The court issued an order appointing the lead plaintiff and lead counsel.

  • Lead Counsel
    Ahdoot & Wolfson, P.C.
    Liddle & Dubin PC
    Bursor & Fisher, P.A.
  • Lead Plaintiff
    Individual
  • Free File
    Order for lead

Second Amended Complaint

03/08/2022

All persons in the United States or its Territories who were users of Robinhood between September 1, 2016 and June 16, 2020 and who placed orders in connection with which Defendants received payment for order flow.

Motion to Dismiss

03/29/2022

A motion to dismiss was filed with the court.

Factual Timeline

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