Tampa Law Firm Files Class-Action Suit After Trading App Outage

TAMPA, FL — A Tampa law firm has filed a class action lawsuit against the online trading app, Robinhood, following its outage on the biggest single-day point gain in the history of the Dow Jones Industrial Average.

The March 2 outage lasted 16 1/2 hours, leaving the more than 10 million users of the Robinhood app unable to participate in the market rally as the Dow rose nearly 1,300 points, the S&P 500 surged 136 points and the Nasdaq jumped 384 points.

The app went down again Monday, March 9, for about 2 1/2 hours on another heavy (bad) day of trading on Wall Street.

“Robinhood has admitted the outage was due to their own failure,” said Michael S. Taaffe, head of broker-litigation and arbitration for the law firm Shumaker, Loop & Kendrick. “Online apps like Robinhood should have robust and redundant back-ups to prevent situations just like this, but Robinhood’s appear to have been inadequate, which is inexcusable."

Robinhood, headquartered in Menlo Park, California, was founded in April 2013 by Vladimir Tenev and Baiju Bhatt. The free-trading app lets investors trade stocks, options, exchange-traded funds and cryptocurrency without paying commissions or fees.

Taaffe warned users of the app to be wary of Robinhood’s free three months of premium service for the inconvenience of the outage as it may contain a release of claims.

Robinhood said it would compensate investors impacted by the outages on a case-by-case basis. A one-month subscription for Robinhood Gold premium costs $5 plus 5 percent yearly interest on borrowing above $1,000, charged daily.

The class action lawsuit, which seeks unspecified damages, was filed Wednesday in U.S. District Court in Tampa.