Robinhood Close to Resolving 2020 Outage Lawsuit

Attorneys for the online trading platform Robinhood Markets say they’ve come to an agreement in principle that resolves a lawsuit by investors who say they were blocked from trading during an outage in March 2020.

“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 (May 26), per a Bloomberg News report.

Learn more: Robinhood Provides Discount To Make Up For Outage

A number of investors sued Robinhood in multiple states, most of them claiming that restrictions by the platform were tantamount to breach of contract.

Read more: Robinhood Confronting Over 30 Civil Lawsuits For Curbing Trading

The outage came at a bad time for the startup, Bloomberg noted, a company whose easy-to-use app attracted young and often inexperienced investors. It happened on a historically bad day for the stock markets, with the Dow dropping 2,000 points as investors contended with the economic fallout of the start of the COVID-19 pandemic.

Robinhood has also been sued over an incident last year in which it limited stock buys for GameStop on its app.

Civil lawsuits filed in federal courts in several states accused the company of curbing trading on its platform and breaking laws, including breach of contract and fiduciary duty, and of denying investors the chance to purchase GameStop stock in the open market.

Last week, Robinhood launched a noncustodial wallet to work with Web3, which will give customers “total control” of their crypto, as the company said on its blog. The product lets customers access the decentralized web and various crypto opportunities, rolling out as a standalone app, though with a design similar to Robinhood’s main app.

See also: Robinhood to Launch Standalone Noncustodial Web3 Wallet

Earlier this month, the company debuted a stock lending feature, which lets users lend out their fully paid stocks to borrowers recruited by Robinhood.

Robinhood has warned stock lending may not be right for every customer though, saying there’s a risk “that Robinhood Securities could default on its obligations to you under the Stock Lending Program and fail to return the securities it has borrowed.”