Siddharth Mehta, who filed the lawsuit in Superior Court for the state of California, is seeking class-action status in his case against the provider of low-fee brokerage services. Among its offerings, Robinhood lets accountholders buy fractional shares. This lets investors of limited means buy stakes in high-priced equities.
In October, Robinhood reported hackers had obtained some customers’ account information. Robinhood has insisted its internal systems weren’t compromised and that unauthorized access was due to identity theft.
Reports at the time noted that customers watched as their accounts were drained but couldn’t reach anyone at Robinhood.
Mehta’s lawyers argue in the suit’s introduction: “The explosion of ‘FinTech,’ digital financial services, and mobile banking has created new pressure points for criminals to exploit. Responsible financial institutions have reacted by implementing better training practices, increasing their security workforces, and increasing invest in new and more secure technologies.”
Robinhood, the lawyers state, hasn’t kept up.
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They wrote: “While the company has narrowly focused on break-neck growth, it has neglected to build out its security infrastructure to adequately protect its customers’ sensitive information.”
Mehta’s lawyers argue that when Robinhood discovered the attacks, “Rather than freezing the accounts and alerting its customers of the breach right away as required under California law, Robinhood said and did nothing. Only when news outlets reported on the breach did Robinhood acknowledge it had occurred.”
Bloomberg, which reported the suit would be filed, stated that Robinhood declined to comment.
Mehta is represented in the matter by the California law firm Erickson Kramer Osborne.
