A 27-year-old truck driver just became Robinhood’s first big headache of 2022

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Less than a week into the new year, a 27-year-old truck driver from Connecticut will have given Robinhood Hood,
-1.76%
A whole new thing to be concerned about in 2022.

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On January 6, a moderator for financial industry regulatory authority ruled that zero-commission trading platform was liable for $29,460.77 in compensatory damages to Jose Batista, a retail investor who filed a complaint with the industry self-regulator in May, alleging that Robinhood was restricted to trading. It had suffered significant investment losses due to the decision of On some meme stocks at the height of the frantic short squeeze of January 2021.

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The decision is the first of its kind to end with Robinhood giving away money to a retail investor stemming from its trading restrictions, and could provide a blueprint for other individual traders hoping to find relief from Robinhood.

For starters, Batista’s case against the $13 billion online broker was narrow and specific, focusing on how the ban on his shares in headphone maker Kos Kos affected his,
-4.90%
and fashion brand Express Inc. EXPR,
-1.97%,
Unlike their entire portfolio.

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“I remember that day, it was life changing for me,” Batista said in an interview with Marketwatch. “I was just day-trading, just trying to catch up.”

Batista said he was also trading in big meme names like Gamestop GME.
-6.73%,
At the time, however, he had no intention of selling them, even though he agreed to sell the shares he saw were peaking.

Jose Batista with his mother.

jose batista

“My plan was to sell Kos and Express that day,” Batista said. “I had a lot, but no one could buy it.”

On January 27, the day before Robinhood and other online brokers imposed trading restrictions, Kos closed at $58 per share, and Express closed at $9.55.

Batista, who only had access to a Robinhood account at the time, became increasingly desperate to trade his shares in some frothy meme stock, fully aware that investors were eager to buy them at a premium.

“He basically left me no other choice,” Batista said of Robinhood. “They were saying ‘You’re just stuck. If you want to sell it. Sell it.'”

On February 1, the day Robinhood resumed trading on Mem, Kos closed at $35 and Express closed at $5.

“It was hard to watch,” Batista reflected.

Unlike seven other retail investors who have so far taken their complaints to the regulator, FINRA agreed that Batista’s experience was Very Harsh to be completely fair.

public intermediary based in Connecticut, John James McGovern Jr wrote in his discovery Robinhood’s two divisions, Robinhood Markets and Robinhood Financial, were “jointly and severally liable” for Batista’s losses.

For Batista’s lawyer, Jorge Altamirano, the cash prize is of great importance; Showing retail investors the right way to use Robinhood.

“There was a lot of noise about all the conspiracy theories,” Altamirano explained, referring to the various civil suits that attempted to prove Robinhood was in collusion with its major market maker, Citadel Securities, to restrict trading and To protect hedge funds shorting mem stocks. The Securities and Exchange Commission investigated such allegations and found they lacked evidence.

In keeping with their narrow view, Altamirano and Batista did not engage with conspiracy theories about trade sanctions and stuck solely to the details of Batista’s case.

Altamirano said, “Finra has shown here that they are ready to make a decision on a case on merit.” “It opens the door for other investors to revisit that day” [in January] And maybe take action. ,

The idea that Batista’s $30K could turn into something big — like a flurry of rewards for damages wrought out of Robinhood’s legal bastion — about January 2021 may still be an exciting one for the army of “apes,” but At least one expert is taking a more measured view of the situation.

“There is no antecedent value to this award, and FINRA wants to go everywhere on this type of arbitration,” warned Francis Curran, a securities litigation attorney at Cudman Trachten Allo & Posner.

Still, Cuarán saw how a FINRA arbitrator could be coerced by the specifics of Batista’s claim, and that Robinhood, who had already been fined several times by FINRA, including a record $70 million fine in June 2021 was involved, which hurt that kind of unsophisticated trader. Designed to draw, in that it helped fuel and then pulled the plug on the mem-stock short-squeeze.

“I think it’s too early to tell if this is the first of a trend,” Curran said. “But it’s definitely got to get Robinhood’s attention.”

And that attention has already been scattered a bit in recent months.

Robinhood, which declined to comment on this story, has faced plummeting stock prices since its July IPO, increased competition, and persistent concerns that the SEC will pay for order flows in 2022. may change its regulations, threatening a large part of its business model. ,

An indication of how 2022 is shaping up may be a deeper look at Batista himself.

While $30K may seem like a modest amount for Robinhood, it is real money for Batista, who said it would go a long way to helping support his young family, in addition to his trucking income, While he continues to invest in the market.

“I will definitely continue to trade,” said Batista, who maintains a Vestigeial Robinhood account but now trades mostly on a competing app, Webble. “These are not meme stocks for me. I just watch momentum. I’ll take 10 stocks and watch all day.”

Speaking of meme shares…

Like the markets, both GameStop and AMC Entertainment AMC,
-0.91%
Bounce back from a huge drop in early trading, but with very different results.

While AMC managed to close most of Monday’s 7.4% morning decline down 0.9%, GameStop had to reverse its 14.2% morning decline and end the session down 6.7%.

That was the story of most memes that day, except for the MAGA meme crowd.

Shares in the so-called “Trump SPAC” Digital World Acquisition Corp. DWAC,
+3.58%,
Climbed 3.6% on the day, riding off the afternoon’s huge jump for the Nasdaq and the… unique investment thesis of its proponents.

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