Robinhood reaches settlement of suits over 2020 trading outage

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Lawyers for Robinhood Markets Inc. said they had reached an agreement in principle to resolve litigation by some investors who were blocked from trading shares in high-flying stocks during an outage in March 2020.

No details were disclosed.

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“Once final details are resolved, and within 60 days of this notice, the parties will file a motion for preliminary approval of the settlement,” the attorneys said in a federal court filing Thursday.

Multiple investors sued Robinhood in several states, mostly alleging restrictions by the trading platform that amounted to a breach of contract, court records show.

Cases in California were consolidated with a federal judge in San Francisco.

The outage was a blow to the Silicon Valley startup, which drew in young, often inexperienced investors with an easy-to-use trading app.

Robinhood popularized the zero-commission brokerage and introduced millions of millennials and Gen Zers to financial markets.

Critics, including some US lawmakers, say it encourages risky frequent trading by novices.

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