He used the app to start trading options in his freshman year of college, and a series of trades resulted in him finding his account was $730,000 in the red, the suit detailed.
“Tragically, Robinhood’s communications were completely misleading, because, in reality, Alex did not owe any money,” the lawsuit contended.
“He held options in his account that more than covered his obligation.”
The suit comes after traders who banded together over Reddit and other social media platforms in recent weeks used Robinhood to make massive share purchases of GameStop, AMC Entertainment and other struggling companies that wealthy investors had bet against.
The campaign, intended to make hedge funds and other large investors suffer, caused the share prices of these companies to soar, and caught the attention securities regulators.
An app popular among retail investors whose stated goal is to “democratize finance for all,” Robinhood at one point limited trades on the most volatile stocks, before reversing course the next day.