The Robinhood PFOF Litigation
Multiple class action lawsuits were filed against Robinhood following the January 2021 trading restrictions. These cases alleged, among other things, that Robinhood's PFOF arrangements with Citadel Securities created a conflict of interest that harmed retail customers. Some cases settled; others were dismissed on procedural grounds.
Legal Theory: Breach of Fiduciary Duty
The primary legal theory in PFOF class actions is breach of fiduciary duty or breach of best execution obligations. Plaintiffs argue that PFOF-dependent brokers prioritize their own financial interests (receiving payment from Citadel) over their customers' interests (receiving the best possible execution price). Courts have reached varying conclusions on whether this theory states a valid claim.
Finding Qualified Legal Counsel
If you believe you have been harmed by PFOF practices, you should consult with a securities attorney. Many securities class action firms offer free consultations. Look for attorneys who specialize in broker-dealer litigation and have experience with market structure cases.