Trading App Robinhood Says Facing US Regulator Inquiries

Stock trading app Robinhood on Friday confirmed it is cooperating with inquiries from US regulators into its decision to temporarily throttle purchases of shares in companies such as GameStop during frenzied trading in January.

According to a filing with the Securities and Exchange Commission, the free brokerage site is facing inquiries from federal financial authorities, state attorneys general and the US Congress, reports AFP.

Dozens of class action cases are now facing Robinhood, which claims it is "cooperating" with the organizations.

The lawsuits “generally allege breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, breach of fiduciary duty and other common law claims,” Robinhood said in the filing.

“We believe that the claims in these lawsuits are without merit and intend to defend against them vigorously.”

Last week, key participants in the GameStop stock trading hysteria told skeptical US lawmakers that their acts were legal and in line with standard stock market procedure.

At a House of Representatives financial services committee meeting, the creators of Robinhood and the online platform Reddit were among those who testified.

Unprecedented recent volatility — with shares in the GameStop video game store surging more than 400 percent — prompted calls for regulators to review the role of social media, hedge funds and trading platforms which some allege manipulated the market.

The GameStop Wall Street upheaval was sparked via a “subreddit” known as WallStreetBets.

“I am not trying to throw anyone under the bus,” Robinhood co-founder and chief executive Vlad Tenev told the House committee meeting.

“All I can say is Robinhood played it by the books.”