Though the class action names many other financial businesses, like Citadel Securities, Charles Schwab, Melvin Capital Management and SoFi Securities, Robinhood is the main antagonist. The complaint calls Robinhood “a true amateur among institutional brokers.”Investors taking part in the class action argue that Robinhood’s business model has a built-in conflict of interest. In this arrangement, the broker sells customer orders to market-making firms (primarily Citadel Securities in Robinhood’s case) that execute the trades. The class action will take at least 18 months to resolve if it goes to trial, said Maurice Pessah, one of the lead lawyers for the plaintiffs. has promised a report on January’s trading frenzy this summer, and warned that changes to how brokerage apps operate might follow.

Source: New York Times August 07, 2021 12:00 UTC