Jose Batista, a retail investor, was awarded almost $30,000 from Robinhood after filing a complaint using the Financial Industry Regulatory Authority’s (or FINRA’s) arbitration service. His case may end up being an example for other retail traders who are still upset at the trading platform’s actions in January of 2021.
On January 28th, Batista was planning on selling his stock in Koss and Express — but Robinhood had placed trading restrictions on them , limiting the amount of shares its users could buy. This meant that Batista had to watch helplessly as the prices of his stock fell to nearly half of what they were the day before the restrictions were put in place, according to MarketWatch . “Seeing it plummeting and plummeting, I felt horrible, and then I felt stuck,” Batista told Motherboard .
Robinhood’s restrictions were thanks to the rush of trades happening around GameStop’s stock, which were in part driven by retail investors. In January 2021, the company was hyped up by users of the WallStreetBets subreddit , and its stock rocketed up in value. This eventually lead to temporary market-wide trading halts and even seemingly caused technical difficulties at several brokerages . That included Robinhood, which restricted trades on not just GameStop but other stocks such as AMC, Blackberry, Koss, and Express.
The trading restrictions meant Robinhood users couldn’t buy any shares of the main meme stocks . It also heavily limited the number of shares its users could buy in other companies — at one point, users could only buy shares of Express if they owned less than five already. For Koss, you were only allowed to buy a single share. The freeze attracted dozens of user lawsuits , review bombs , and even attention from lawmakers . Most of the other lawsuits and investigations haven’t ended up going anywhere, though, according to MarketWatch and Batista’s lawyer.
The arbitrator doesn’t give a rationale for Batista’s win. However, Batista’s lawyer wrote a post theorizing about why they were successful where others had failed: because the case focused on “Robinhood’s inadequate liquidity management practices and monitoring of its counterparty risk.” The post also says that they “attacked, head-on, the notion that Robinhood’s customer agreement gives it unfettered right to restrict trading for any reason, at any time.”
To other traders, the case could represent blood in the water. While arbitration decisions don’t set legal precedent, meaning that another arbitrator could rule a different way in an almost identical case, Batista’s lawyer calls for other Robinhood customers to contact the firm. A few threads on stock-related subreddits have already pointed out the possibility that the case could be used as an example to try and get a payout from Robinhood.
In addition to the $29,460.77 in damages Batista will receive, Robinhood will also be on the hook for a few more grand: the arbitrator ordered it to pay almost a year’s interest on the money. Robinhood will also have to pay filing and some other fees.
Robinhood, the parent company of the two entities named in the dispute, declined to provide an on-the-record response for this story. Those two entities are Robinhood Securities and Robinhood Financial. Both are members of FINRA, though the parent company is not — so the ruling applies to those two legal entities within Robinhood itself.
While GameStop’s stock led to the trade restrictions, it’s not what Batista filed his complaint about. Batista did own GameStop shares at the time but had no plans of selling them, according to MarketWatch. Some Redditors have urged him to put his winnings back into GameStop, but he instead plans on investing the money into his trucking business and using it to pay for childcare, according to Motherboard .
For Batista, it seems like a happy end to the saga — maybe his story will be adapted as part of one of the bajillion movies, documentaries, and TV shows that are supposedly in the works about the GameStop / WallStreetBets bonanza.