Lucas Jackson/Reuters
- Angry Robinhood users say they lost or missed out on thousands of dollars while the app experienced outages Monday and Tuesday.
- The commission-free trading app, popular among millennials, was offline for almost all of trading Monday - and half of Tuesday - due to infrastructure issues as the markets made their biggest rally in over a decade.
- Some people have threatened legal action against Robinhood and are asking regulators to investigate the company - but federal rules make a class-action lawsuit unlikely.
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When Robinhood faced outages Monday and Tuesday, users were locked out of the biggest market rally in 12 years. Now, some users are calling on federal regulators to investigate the commission-free trading app.
Robinhood cited problems with its infrastructure as the reason the app went offline amid a high volume of trading requests. In a letter to users Tuesday night, Robinhood offered to address concerns of lost money "on a case by case basis" and said some users would be offered three months of its premium "gold" service for free.
As rage mounted over the app's downtime, many users said they would file complaints with the Financial Industry Regulatory Agency. Others threatened to join a class-action lawsuit against the app, and a Twitter account named "Robinhood Class Action" racked up more than 6,600 followers this week.
But federal guidelines indicate that a class action lawsuit against the company is unlikely. A FINRA spokesperson told Business Insider that, in general, investors can't bundle complaints and file a joint class-action complaint (FINRA doesn't comment on existing or potential cases).
FINRA rules set forth narrow circumstances for joint complaints stemming from shared transactions, meaning complainants against Robinhood would likely have to go it alone.
The Robinhood Class Action Twitter account seemed to acknowledge as much Wednesday afternoon, telling its followers that individual cases were the most likely path forward. The person running the Twitter account did not immediately respond to Business Insider's request for comment.
James Koncar, a Robinhood user from Tampa, told Business Insider that he's upset at missing out on trades because of being locked out of the rally. Koncar said he reported Robinhood to the Securities and Exchange Commission and is considering filing a complaint with FINRA - and added that he won't be using Robinhood in the future.
"Sure, I lost money, but there's no guarantee that I would've sold at open Monday. The point was I was completely unable to until it was too late," he said. "They opened the door for other brokers to offer commission free trading and I will be taking advantage of that with another broker."
1/Most lawyers I have spoken to are only after individual cases with projected losses of $50,000. They will assists in @FINRA arbitration and likely get you a settlement in 12-18 months. Not ideal but this is ultimately the reality.
- Robinhood Class Action (@ClassRobinhood) March 4, 2020