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.

    How do I get around Robinhood restrictions?
    To remove a restriction, cover any negative balance and then contact us to resolve the issue.Some of these reasons include:
    1. Transfer Reversals.
    2. Incorrect or Outdated Information.
    3. Fraud Inquiries.
    4. Account Levies.
    more
    Why does Robinhood restrict day trading?
    Your Day Trade Limit It's based on the amount of cash that you have in your brokerage account, as well as the maintenance requirements on the stocks that you hold overnight. In general, your day trade limit will be higher if you have more cash than stocks, or if you hold mostly stocks with low maintenance requirements. more
    How do I remove restrictions on Robinhood?
    Account Restrictions
    1. If you declare yourself as a control person for a company, you are typically blocked from trading that stock.
    2. Restrictions may be placed on your account for other reasons.
    3. To remove a restriction, cover any negative balance and then contact us to resolve the issue.
    more
    How do I remove day trading restrictions on Robinhood?
    You can enable or disable this feature in your mobile app:
    1. Tap the Account icon in the bottom right corner.
    2. Tap Account Summary.
    3. Scroll down and tap Day Trade Settings.
    4. Toggle Pattern Day Trade Protection on or off.
    more
    How long is Robinhood restrictions?
    for 90 days If you day trade while marked as a pattern day trader, and ended the previous trading day below the $25,000 equity requirement, you will be issued a day trade violation and be restricted from purchasing (stocks, ETPs, or options with Robinhood Financial and cryptocurrency with Robinhood Crypto) for 90 days. more
    How long does Robinhood take to remove restrictions?
    Robinhood Account Restricted From Purchasing FAQ It can take up to 90 days, but, sometimes, it's unlocked within just a week. It really depends on the reason that led your account to be locked on the platform. more
    Is it legal for Robinhood to restrict trading?
    And Robinhood's user agreement clearly states it “may at any time, in its sole discretion and without prior notice to [users], prohibit or restrict [users] ability to trade securities.” While some users are likely to be mad as a result of the sudden restrictions, the user agreement clearly states that Robinhood was more
    How do you get out of 90 day restrictions on Robinhood?
    You can remove 90 days restriction on Robinhood by closing the trading day at or above $25000. But frequent violations may cause the broker to limit your account activity to only closing positions. more
    How do I remove 90 day restrictions on Robinhood?
    If you do not meet the minimum equity requirement, you will receive a day trade violation and your account will be locked for 90 days. You can remove this restriction by closing a trading day at or above $25,000, but frequent violations may cause the broker to limit your account activity to only closing positions. more
    How long do Robinhood restrictions last?
    90 days If you day trade while marked as a pattern day trader, and ended the previous trading day below the $25,000 equity requirement, you will be issued a day trade violation and be restricted from purchasing (stocks, ETPs, or options with Robinhood Financial and cryptocurrency with Robinhood Crypto) for 90 days. more
    How do you lift restrictions on Robinhood?
    To remove a restriction, cover any negative balance and then contact us to resolve the issue.Some of these reasons include:
    1. Transfer Reversals.
    2. Incorrect or Outdated Information.
    3. Fraud Inquiries.
    4. Account Levies.
    more

    Source: www.theverge.com

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