Robinhood class action lead counsel appointed

A federal judge in Oakland has consolidated five class actions accusing Robinhood of illegally taking advantage of unsophisticated investors by failing to disclose payments for order flow. She appointed Ahdoot & Wolfson, PC, Bursor & Fisher PA, and Liddle & Dubin PC to lead the litigation.

While she approved on Monday lead plaintiff Ji Kwon's motion to group the lawsuits and appoint her favored counsel, U.S. District Judge Yvonne Gonzalez Rogers indicated she's concerned the leadership structure is "too top-heavy and may result in extra fees and costs." She directed the firms to propose an outline of the structure and individual attorneys expected to lead on specific responsibilities and how they intend to minimize inefficiencies and duplicative costs.

Robinhood is alleged to have misrepresented the quality of its payment for order flow, in which it receives payment from investors in exchange for executing trades. Robinhood Order Flow Litigation, 20-cv-09328 (N.D. Cal., filed Dec. 23, 2020).

"While Defendants promoted and advertised an easy-to-use "commission free" trading platform, Defendants profited extensively from unsuspecting consumers who executed trades on Defendants' platform at inferior execution prices compared to what consumers would have received from Robinhood's competitors," Adhoot & Wolfson partner Tina Wolfson wrote in the first-filed complaint.

The lawsuits seek to represent users who traded on the app from September 2016 to June 2019.