For many investors, the ability to access their accounts during market swings is the only line of defense against financial ruin. When technical failures block that access, the consequences are often devastating. This reality was at the heart of the Robinhood Outage Litigation, a consolidated case in the Northern District of California that impacted thousands of customers across the country.
At Meyer Wilson Werning, accountability doesn’t stop at the courtroom. We support the organizations that fight for investors who have nowhere else to turn, including those affected by Robinhood platform failures. If you or someone you know suffered significant investment losses due to platform misconduct or outages, reach out today for a free and confidential consultation.
What Led to the Robinhood Class Action Settlement Funds?
The litigation was the direct result of a series of system outages that plagued Robinhood during March 2020. The most significant failure occurred in March 2020, when a prolonged outage prevented investors from accessing their accounts or executing trades. Because this occurred during a period of extreme market volatility, many users were left unable to manage their portfolios, leading to substantial losses.
Attorneys representing the class eventually secured a $9 million settlement. After the primary distribution was made to class members, a balance of approximately $200,000 remained. Because this amount was not large enough to justify the administrative costs of another individual distribution round, the court authorized a Cy pres award.
We Have Recovered Over
$350 Million for Our Clients Nationwide.
How the Cy Pres Doctrine Benefits the University of Miami School of Law
The Cy Pres doctrine is a legal principle that allows courts to direct leftover settlement funds to a nonprofit organization whose mission aligns with the interests of the original plaintiffs. In this case, the court determined that the University of Miami School of Law’s Investor Rights Clinic was an ideal recipient. The clinic’s work—providing legal aid to harmed investors with claims too small to attract private counsel—closely mirrored the challenges faced by the Robinhood class.
Securing this vital funding was a collaborative effort. While Kaplan Fox & Kilsheimer LLP spearheaded the advocacy for the class plaintiffs, Courtney Werning and our firm, whose support for the clinic has been a long-standing priority, acted as essential catalysts in bringing the Cy Pres award to the Investor Rights Clinic.
“We are honored to receive the award in this significant case which will assist the law school in providing continued funding to the clinic,” said Melanie Cherdack, the clinic’s associate director.
Important Points About the Clinic’s Impact on Investor Protection
Since it was launched in 2012 with a limited grant from the FINRA Foundation, the Investor Rights Clinic has become a cornerstone of investor protection. It is one of nine specialized clinics at the law school and is staffed by second- and third-year law students who gain hands-on experience by advocating for the investing public.
Key achievements and activities of the clinic include:
- Financial Recovery: The clinic has recovered more than $1.5 million for its clients, since it was created.
- Student Advocacy: Interns like Lara Weiss (2L) work directly with real clients to resolve disputes and navigate the legal system.
- Regulatory Engagement: Students such as Jackson Gillespie (3L) have traveled to Washington, DC, to meet with FINRA regulators and gain insight into investigations and enforcement actions.
- Policy Influence: The clinic drafts comment letters on SEC and FINRA rule proposals and has helped expand victim recovery funds in Florida.
Scott Eichhorn, the director of the clinic, noted that these funds will go directly toward helping students gain more experience in client representation and advocacy for the investing public.
Our lawyers are nationwide leaders in investment fraud cases.
Seeking Recovery for Investment Misconduct
Platform failures, unsuitable recommendations, breach of fiduciary duty — investors have legal options regardless of how the harm happened. Brokerage firms have a duty to maintain stable platforms and supervise their representatives. When they fall short, Meyer Wilson Werning is prepared to hold them accountable.
If you believe your brokerage firm failed to protect your interests, contact us today for a free and confidential consultation. Our team will review your situation at no charge — and we only get paid if we recover for you.
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Frequently Asked Questions
What is a Cy pres award?
A Cy pres award is a distribution of remaining funds from a class action settlement to a charitable or nonprofit organization. This occurs when the remaining balance is too small to be distributed to individual class members effectively. The chosen organization must serve a purpose similar to the goals of the original lawsuit.
How does the Investor Rights Clinic help people?
The Investor Rights Clinic provides legal representation to investors who have been harmed by misconduct but have claims that are too small to hire a private attorney. Under the guidance of faculty, law students handle these cases, helping to recover funds through negotiation or arbitration.
Why was Robinhood sued in 2020?
The lawsuit alleged that the platform’s system outages in March 2020 prevented investors from trading during a period of high market volatility, leading to significant financial harm because users could not sell declining assets or manage their risk.
What should I do if I suffered losses during a platform outage?
If you suffered substantial losses because you could not access your account or execute trades, you should consult with a securities attorney. You may be eligible to participate in a class action or pursue an individual claim to recover your damages.
Recovering Losses Caused by Investment Misconduct.