The public filing, which amends the registration statement that Robinhood filed in connection with its July 2021 initial public offering (IPO), discloses that the SEC’s Division of Examinations and the Financial Industry Regulatory Authority (“FINRA”) have submitted inquires to Robinhood related to whether any employee executed trades in certain securities, including GameStop Corp. and AMC Entertainment Holdings, Inc., before the public announcement that Robinhood would restrict trading in those securities on January 28, 2021.

On Thursday, January 28, 2021, Robinhood designated specific stocks “position closing only,” restricting its customers from purchasing additional shares in those stocks. The targeted stocks included GameStop (NYSE: GME), AMC (NYSE: AMC), Blackberry (NYSE: BB), Nokia (NYSE: NOK), Koss Corporation (NYSE: KOSS), and Express, Inc. (NYSE: EXPR).

Robinhood was joined by other online brokers who all implemented trading restrictions on targeted securities. These online brokerage firms, including Robinhood, intentionally deprived their customers, without notice, of the ability to use their service to slow the growth of the targeted “meme stock” securities.

As the trading restrictions were put into place by the online brokerage firms, including Robinhood, retail investors watched helplessly as the value of their positions plummeted with no potential to remediate the positions given the wrongful sale pressure initiated by Robinhood and others.

Now it appears possible that at least some Robinhood employees were able to execute trades in advance of the company’s public announcement that it would implement trading restrictions, potentially protecting themselves from the wreckage to come caused by their employer.

Investors who have been harmed should not feel discouraged. Many retail investors across the country are fighting back and filing lawsuits in the form of securities arbitration complaints to recover losses from Robinhood as a result of its unprecedented decision to place trading restrictions on stocks of publicly traded companies on January 28, 2021, amid an unprecedented rise in stock prices.

Recently, a 26-year-old truck driver from Connecticut, represented by Iorio Altamirano LLP, filed a securities arbitration claim alleging that Robinhood’s negligence caused the share prices of his stock positions to fall, causing significant financial loss.

What is Securities Arbitration?

Arbitration is an alternative dispute resolution process. When an investor suffers investment losses due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor or brokerage firm in an effort to be compensated. Arbitration is the primary forum for resolving disputes between investors and brokerage firms because it is a contractual obligation. The customer and broker-dealer contractually agree to use arbitration to resolve disputes when the customer opens a brokerage account and signs the customer agreement that includes an arbitration clause. To read more about securities arbitration, click here.

How to Recover Financial Losses or Obtain a Free Consultation

Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who understands the FINRA forum and can navigate the arbitration process to advocate effectively on their behalf.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY, representing investors in securities arbitrations against Robinhood.

Iorio Altamirano LLP pursues individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.

Customers of Robinhood who suffered losses as a result of trading restrictions placed on January 28, 2021, are encouraged to contact Iorio Altamirano LLP using the following form for a free and confidential consultation. Iorio Altamirano LLP can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.

See Also:

Investor Alert: Iorio Altamirano LLP Investigates Robinhood for Failing to Exercise Due Diligence Before Approving Options Accounts

Robinhood’s latest public filing discloses that Robinhood continues to face regulatory, legal, and reputational backlash for its past business practices.

The filing also discloses that the SEC and Financial Industry Regulatory Authority (“FINRA”) are investigating whether any Robinhood employees traded “meme stocks,” including GameStop Corp. and AMC Entertainment Holdings, Inc., before the public announcement that Robinhood would impose trading restrictions on those securities on January 28, 2021.

Robinhood is already facing regulatory investigations and litigation, including securities arbitrations, related to its decision to place trading restrictions on “meme stocks,” such as GameStop (NYSE: GME), AMC (NYSE: AMC), Blackberry (NYSE: BB), Nokia (NYSE: NOK), Koss Corporation (NYSE: KOSS), and Express, Inc. (NYSE: EXPR), on January 28, 2021.

Robinhood is also facing regulatory investigations and customer arbitration disputes related to its options trading approval process.

Iorio Altamirano LLP, a securities arbitration law firm in New York, is filing claims on behalf of Robinhood customers who suffered harmed due to the January 2021 trading restrictions or who were approved to trade options by Robinhood but did not satisfy eligibility requirements. For more about the investigations, click on the following links:

Iorio Altamirano LLP Investigating Robinhood for January 2021 Trading Restrictions

Investor Alert: Iorio Altamirano LLP Investigates Robinhood for Failing to Exercise Due Diligence Before Approving Options Accounts

January 2021 Trading Restrictions

Robinhood and its Co-Founder and CEO, Vladimir Tenev, among others, have received requests for information, and in some cases, subpoenas and requests for testimony, related to investigations and examinations of the early 2021 trading restrictions from the United States Attorney’s Office for the Northern District of California (“USAO”), the U.S. Department of Justice, Antitrust Division, the SEC staff, FINRA, the New York Attorney General’s Office, other state attorneys general offices and several state securities regulators. Also, a related search warrant was executed by the USAO to obtain Mr. Tenev’s cell phone.

Robinhood has also received inquiries from the SEC’s Division of Examinations and FINRA related to employee trading in certain securities that were subject to Robinhood’s trading restrictions on January 28, 2021, including GameStop Corp. and AMC Entertainment Holdings, Inc. According to the public filing, the regulatory probes relate to whether any employee executed trades in the subject securities in advance of the public announcement of the early 2021 trading restrictions on January 28, 2021.

In addition, Robinhood has received information and testimony requests from certain committees and members of the U.S. Congress, and Mr. Tenev, among others, has provided or will provide testimony concerning the January 2021 trading restrictions.

Many individual retail investors felt cheated and wronged when Robinhood restricted customers from purchasing specific securities on January 28, 2021, and are filing lawsuits in the form of securities arbitration complaints and class actions to recover losses.

Robinhood’s public filing also discloses that approximately 50 putative class actions have been filed relating to the early 2021 trading restrictions. The public filing does not disclose the number of FINRA arbitrations that customers have filed, but upon information and belief, dozens, perhaps hundreds, of claims have been filed.

Recently, a 26-year-old truck driver from Connecticut, represented by Iorio Altamirano LLP, filed a securities arbitration claim alleging that Robinhood’s decision to halt the purchase of securities by retail investors caused the share prices of the publicly traded companies to fall, resulting in losses.

Options Trading Approval Process

On June 30, 2021, FINRA and Robinhood entered into a Letter of Acceptance, Waiver, and Consent, whereby Robinhood consented to pay the largest financial penalty ever levied by FINRA, $70 million, for alleged systemic supervisory failures and significant harm suffered by millions of customers. Among those supervisory failures was the firm’s failure to exercise due diligence before approving options accounts.

The latest SEC filing includes the disclosure of several regulatory investigations and enforcement actions related to Robinhood’s options trading approval process.

First, the filing discloses that the SEC is conducting an examination, and FINRA and certain state regulatory authorities are conducting investigations regarding Robinhood’s options trading and related customer communications and displays. The SEC, FINRA, and state regulatory authorities are reviewing, among other things, how Robinhood displays cash and buying power to customers and its options trading approval processes.

Second, the filing discloses that on February 8, 2021, the family of Alexander Kearns, a Robinhood customer who traded options, filed a lawsuit in the Superior Court of the State of California, County of Santa Clara, against RHF, RHS, and RHM in connection with Mr. Kearns’s death by suicide in June 2020. The lawsuit asserts claims for wrongful death, negligent infliction of emotional distress, and unfair business practices under a California statute, and seeks damages and other relief.

Third, the Amendment to the Form S-1 discloses that on December 16, 2020, the Enforcement Section of the Massachusetts Securities Division filed an administrative complaint against Robinhood. The Complaint alleges three counts of Massachusetts securities law violations regarding unethical and dishonest conduct or practices, failure to supervise, and failure to act in accordance with the Massachusetts fiduciary duty standard. Among other things, the Massachusetts Securities Division alleged that Robinhood’s product features and marketing strategies, outages, and options trading approval process constitute violations of Massachusetts securities laws.

Finally, the public filing discloses that Robinhood is engaged in discussions with FINRA regarding a possible negotiated resolution of certain FINRA matters, including options trading and related customer communications and displays noted above.

Recently, a 36-year-old nightclub doorman, represented by Iorio Altamirano LLP, filed a securities arbitration claim alleging that he suffered losses as a result of Robinhood’s failure to exercise due diligence before approving his options trading account, a direct result of Robinhood’s overreliance on technology and its failure to supervise the operation and maintenance of its technology.

Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY, representing investors in securities arbitrations against Robinhood.

Iorio Altamirano LLP pursues individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.

Customers of Robinhood who suffered losses as a result of trading restrictions placed on or about January 28, 2021, or due to options trading are encouraged to contact Iorio Altamirano LLP using the following form for a free and confidential consultation. Iorio Altamirano LLP can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.

Robinhood agreed to the sanctions to settle broad regulatory allegations that the firm misled customers, approved ineligible traders for risky strategies, and did not supervise technology that failed and locked millions out of trading.

In determining the appropriate sanctions, FINRA stated that it “considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so.”

The enforcement action is another hit for Robinhood, which has faced scrutiny, lawsuits, and securities arbitration complaints, after it restricted customers from purchasing “meme stocks,” such as GameStop (NYSE: GME), AMC (NYSE: AMC), Blackberry (NYSE: BB), Nokia (NYSE: NOK), Koss Corporation (NYSE: KOSS), and Express, Inc. (NYSE: EXPR), on January 28, 2021.

As the trading restrictions were put into place by Robinhood, retail investors watched helplessly as the value of their positions plummeted with no potential to remediate the positions given the wrongful sale pressure initiated by Robinhood and others.

Many retail investors felt cheated and wronged by the actions of these brokerage firms and are filing lawsuits in the form of securities arbitration complaints to recover losses from Robinhood as a result of its unprecedented decision to place trading restrictions on stocks of publicly traded companies on January 28, 2021, amid a rise in stock prices.

Recently, a 26-year-old truck driver from Connecticut, represented by Iorio Altamirano LLP, filed a securities arbitration claim alleging that Robinhood’s decision to halt the purchase of securities by retail investors caused the share prices of the publicly traded companies to fall, resulting in losses.

FINRA Letter of Acceptance, Waiver, and Consent No. 2020066971201

FINRA and Robinhood Financial LLC entered into a Letter of Acceptance, Waiver, and Consent No. 202006671201 on June 30, 2021, after FINRA alleged widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so. Specifically, FINRA alleged:

• Despite Robinhood’s self-described mission to “de-mystify finance for all,” during certain periods since September 2016, the firm has negligently communicated false and misleading information to its customers. The false and misleading information concerned a variety of critical issues, including whether customers could place trades on margin, how much cash was in customers’ accounts, how much buying power or “negative buying power” customers had, the risk of loss customers faced in certain options transactions, and whether customers faced margin calls.
• For instance, one Robinhood customer who had turned margin “off,” tragically took his own life in June 2020. In a note found after his death, he expressed confusion as to how he could have used margin to purchase securities because, he believed, he had not “turned on” margin in his account. As noted in the settlement, Robinhood also displayed to this individual (and certain other customers) inaccurate negative cash balances.
• Additionally, due to Robinhood’s misstatements, thousands of other customers suffered more than $7 million in total losses.
• Since Robinhood began offering options trading to customers in December 2017, the firm has failed to exercise due diligence before approving customers to place options trades. The firm relied on algorithms—known at Robinhood as “option account approval bots”—to approve customers for options trading, with only limited oversight by firm principals. Those bots often approved customers to trade options based on inconsistent or illogical information. As a result, Robinhood approved thousands of customers for options trading who either did not satisfy the firm’s eligibility criteria or whose accounts contained red flags indicating that options trading may not have been appropriate for them.
• From January 2018 to February 2021, Robinhood failed to reasonably supervise the technology that it relied upon to provide core broker-dealer services, such as accepting and executing customer orders.
• Between 2018 and late 2020, Robinhood experienced a series of outages and critical systems failures. The most serious outage occurred on March 2 and 3, 2020, when Robinhood’s website and mobile applications shut down, preventing Robinhood’s customers from accessing their accounts during a time of historic market volatility. Although the firm had a business continuity plan at the time of the March 2-3 outage, it did not apply it because the plan was unreasonably limited to events that impacted the firm’s physical location. Robinhood’s inability to accept or execute customer orders during these outages resulted in individual customers losing tens of thousands of dollars.
• Between January 2018 and December 2020, Robinhood failed to report to FINRA tens of thousands of written customer complaints that it was required to report. Robinhood’s reporting failures included complaints that Robinhood provided customers with false and misleading information and that customers suffered losses as a result of the firm’s outages and systems failures. Robinhood’s reporting failures were primarily the result of a firm-wide policy that exempted certain broad categories of complaints from reporting, even though those categories fell within the scope of FINRA’s reporting requirements.

The settlement also resolved numerous other charges against Robinhood, including the firm’s failure to have a reasonably designed customer identification program and its failure to display complete market data information.

The settlement terms also call for Robinhood to hire a consultant to review the brokerage company’s compliance systems within six months. Robinhood would then have another three months to implement any recommendations made by the consultant.

Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY, representing investors in securities arbitrations against Robinhood.

Iorio Altamirano LLP pursues individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.

Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.

See also:

Takeaways from Robinhood’s IPO Filing

Investor Alert: Iorio Altamirano LLP Investigates Robinhood for Failing to Exercise Due Diligence Before Approving Options Accounts

26-year-old Truck Driver from Connecticut Files Securities Arbitration Claim Against Robinhood for Placing Trade Restrictions on certain “Meme Stocks”

Retail Investors Fight Back Against Robinhood for Its January 28, 2021, Trading Restrictions on “Meme Stocks,” Such as GameStop, AMC, Koss Corporation, and Express, Inc.

Robinhood was joined by other online brokers, including TD Ameritrade, Charles Schwab & Co, Inc, Interactive Brokers, LLC, Webull Financial, LLC, E*Trade Securities LLC, who all implemented trading restrictions on targeted securities. These online brokerage firms, including Robinhood, intentionally deprived their customers, without notice, of the ability to use their service in order to slow the growth of the targeted “meme stock” securities.

As the trading restrictions were put into place by the online brokerage firms, including Robinhood, retail investors watched helplessly as the value of their positions plummeted with no potential to remediate the positions given the wrongful sale pressure initiated by Robinhood and others.

Many retail investors felt cheated and wronged by the actions of these brokerage firms, particularly Robinhood, which has held itself out as a brokerage firm for all. Front and center on its website, Robinhood declares that it believes that “the financial system should be built for everyone.” That could not be further from the truth.

Now, many retail investors across the country are fighting back and filing securities arbitration complaints to recover losses from Robinhood as a result of its unprecedented decision to place trading restrictions on stocks of publicly traded companies on January 28, 2021, in the midst of an unprecedented rise in stock prices.

Most recently, a 26-year-old truck driver from Connecticut, represented by Iorio Altamirano LLP, filed a securities arbitration claim alleging that Robinhood’s decision to halt the purchase of securities by retail investors caused the share prices of the publicly traded companies to fall, resulting in losses.

What is Securities Arbitration?

Arbitration is an alternative dispute resolution process. When an investor suffers investment losses due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated. Arbitration is the primary forum for resolving disputes between investors and brokerage firms because it is a contractual obligation. The customer and broker-dealer contractually agree to use arbitration to resolve disputes when the customer opens a brokerage account and signs the customer agreement that includes an arbitration clause. To read more about securities arbitration, click here.

How to Recover Financial Losses or Obtain a Free Consultation

Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who understands the FINRA forum and can navigate the arbitration process to effectively advocate on their behalf.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.

If you have suffered financial losses, please fill out the following form for a free and confidential consultation. You may be entitled to compensation without payment of any out-of-pocket fees or costs through a contingency fee arrangement.

How is an Arbitration Claim Different Than a Class Action?

A securities arbitration complaint is brought by an individual against a brokerage firm. The person who brings the claim (the Claimant) has complete control over settlement decisions. If the dispute is not settled, an arbitration panel will hear evidence and decide whether the brokerage firm is liable to the Claimant. The arbitration panel will also determine how much, if any, monetary damages are owed to the Claimant.

A class action complaint is a lawsuit filed in court by an individual on behalf of all like suited individuals. Individuals who are not class representatives do not have input on settlement decisions. Class actions can be dismissed for various reasons, and even if there is a recovery someday, class members often only receive pennies on the dollar.

See Also:

Takeaways from Robinhood’s IPO Filing

Investor Alert: Iorio Altamirano LLP Investigates Robinhood for Failing to Exercise Due Diligence Before Approving Options Accounts

Breaking News: Robinhood Ordered to Pay $70 Million, the Largest Financial Penalty Ever Ordered by FINRA

26-year-old Truck Driver from Connecticut Files Securities Arbitration Claim Against Robinhood for Placing Trade Restrictions on certain “Meme Stocks”

Customers of Aegis Capital, including customers that have been notified that they may be receiving restitution, should consult with a securities arbitration law firm. If you or a loved one were a customer of Aegis Capital, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.

Original Post:

Another Day, Another Disciplinary Action Against Aegis Capital Corp.

The Financial Industry Regulatory Authority (“FINRA”) has suspended Aegis Capital Corp. financial advisor Corey Alexander Johnson from the securities industry for 30-calendar days. Mr. Alexander consented to the suspension after FINRA alleged that he engaged in discretionary trading without written authorization for five customers between April 2017 and April 2019, executing approximately 1,358 transactions. FINRA also fined Mr. Johnson $5,000.

Mr. Johnson is the fourth Aegis broker, or former broker, to be disciplined by FINRA this year. A fifth broker has received notice of a complaint filed by FINRA’s Department of Enforcement. Separately, earlier this month, the firm itself was sanctioned by FINRA and ordered to pay restitution to customers. What a start to the year for Aegis!

If you have suffered financial losses investing with Aegis Capital Corp, or suspect that Aegis Capital Corp. did not have your best interest in mind when recommending investments or making account transactions, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your account or annuity contract.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Aegis Capital Corp.

FINRA Letter of Acceptance, Waiver, and Consent No. 2019061906301

FINRA and Mr. Johnson entered into a Letter of Acceptance, Waiver, and Consent No. 2019061906301 on March 23, 2021, after FINRA alleged that from April 2017 through April 2019, while associated with Aegis Capital, Mr. Johnson effected 1,358 trades in five customers’ accounts using discretion without the customers’ prior written authorization. None of the five customers provided written authorization for Johnson to exercise discretion in their accounts, and Aegis did not accept any of the five accounts as discretionary accounts.

Early 2021 Disciplinary Actions

Mr. Johnson worked out of the firm’s branch office in Melville, New York, just like Steven Luftschein, who was barred from the brokerage industry by FINRA in January 2021. Mr. Luftschein churned and excessively traded the accounts of three of his customers.

In January 2021, FINRA also suspended former Aegis Capital Corp. broker Anthony (Tony) Tricarico from the securities industry for six months for excessively and unsuitably trading three clients’ accounts registered with Aegis.

Earlier this month, FINRA suspended former Aegis Capital Corp. broker Edmund Zack for excessive trading and using discretion without prior authorization.

A fifth broker, Kishan (Sean) Parikh), received notice of a complaint filed by FINRA’s Department of Enforcement. The complaint alleges that Mr. Parikh engaged in both excessive and unauthorized trading.

Separately, the firm itself was sanctioned by FINRA and ordered to pay restitution to customers for a series of violations.

Unfortunately, this is not new. Aegis Capital Corp has a long history of allegations of wrongdoing.

In 2017, Aegis was included in a Reuters study that analyzed FINRA data and identified 48 firms whose brokers have been flagged for serious incidents. The Reuters’ analysis showed that Aegis Capital had 39% of its brokers with at least one of the most serious red flags, per the study, on their public disclosure reports.

The alleged conduct by the brokers that have been sanctioned this year, such as excessive trading, churning, and unauthorized trading, are common practices for “boiler room” broker-dealers.

Excessive trading occurs when a financial advisor makes many trades in a customer’s account, not to benefit the customer but to generate commissions for the broker.

Churning is a more egregious variation of excessive trading. Churning refers to a situation where the broker executed an excessive number of trades and did so with the intent to defraud or reckless disregard for the customer’s interest.

Unauthorized trading often occurs in non-discretionary accounts, where a customer retains discretion. In non-discretionary accounts, brokers must obtain a customer’s permission every time before placing a trade.

Excessive trading, churning, and unauthorized trading are unethical and illegal practices. They are all also violations of securities rules and regulations and can cause enormous harm to customers.

Aegis Capital Corp. – A Duty to Supervise

Financial institutions like Aegis Capital Corp. must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as annuity switches, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

How to Recover Financial Losses or Obtain a Free Consultation

If you have suffered investment losses with Aegis Capital Corp. or suspect other inappropriate activity occurred in your investment or retirement account, contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (646) 330-4624 for a free and confidential review of your legal rights.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.

See Also: Iorio Altamirano LLP Files GPB Automotive Claim Against Aegis Capital Corp