Robinhood Trader Wins $30,000 in ‘First of Its Kind’ Payout Following GameStop Mania

The 27-year-old single father alleged he lost significant amounts of money because of the platform’s decision to restrict trading last January.
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(Photo credit: Jose Batista)

A 27-year-old truck driver and single father in Connecticut won nearly $30,000 in compensatory damages last week after filing a complaint against Robinhood related to 2021’s Reddit-fueled retail investing frenzy. The decision appears to be “the first of its kind to end with Robinhood paying money to a retail investor” because of the company’s decision to restrict trading on some stocks during the GameStop mania of last January. 


The retail trader, Jose Batista, alleged in a complaint filed with the Financial Industry Regulatory Authority last May that he lost significant amounts of money because of the zero-commission trading platform’s decision to restrict the trading of certain high-flying meme stocks

“I kept asking them, ‘Are you serious? Are you serious?’” Batista told Motherboard when asked about the decision. “I was very, very, very, very happy, grateful and thankful.”

The decision was made by John James McGovern Jr., an independent arbitrator for FINRA, who determined that the trading platform was “jointly and severally liable” for Batista’s financial losses. FINRA, a private self-regulatory organization, said it played no role in the arbitration decision. 

Robinhood did not respond to a request for comment but denied the allegations during the arbitration process, according to FINRA. 

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The arbitration revolved around Robinhood’s decision to restrict stock trades on numerous so-called meme stocks during an “unprecedented stock rise” in late January 2021, which led to mass anger in the retail trading community. Iorio told Motherboard that said his client had previously implemented a “buy-and-sell momentum strategy,” in which he bought securities and then quickly sold them. While Batista owned shares of GameStop, the brand most closely associated with the mania, Batista’s lawyer, August Iorio of Iorio Altamirano LLP, focused on his client’s inability to trade shares of the headphones manufacturer Koss and fashion retailer Express. 


By Jan. 27, one day before the restrictions, Koss’ and Express’ share prices had grown to $58 and $9.55 a share, respectively, according to MarketWatch. Batista had shown his mom his ballooning account balance with amazement and woken early in the morning to look at pre-market prices, planning to trade, he told Motherboard. But Robinhood had restricted trading of the stocks. “A platform like Robinhood had never done this before,” said Iorio, the lawyer. “So investors like Jose didn't have a sense of what was going on.” Batista could only watch in horror as the price of both dropped precipitously through Feb. 1—Koss shares falling to $35 and Express hitting $5—when Robinhood trading resumed as normal. 

“I didn't even know what to think,” he told Motherboard. “Seeing it plummeting and plummeting, I felt horrible, and then I felt stuck.”


Jose Batista's mother and him pose for a photo. Batista alleged in a complaint filed with the Financial Industry Regulatory Authority last May that he lost significant amounts of money because of the zero-commission trading platform’s decision to restrict the trading of certain high-flying meme stocks.

Batista’s lawyers said they received calls from numerous retail traders after the fallout from the meme-stock craze. He knew Batista’s case would be an uphill battle but felt Robinhood had blindsided investors by changing the rules of the game without notice. 

“We knew something just wasn't right about Robinhood making the unilateral decision to restrict trading,” Iorio said. “They made that decision despite the fact that they knew that a lot of their users would be harmed.”


Iorio focused his argument around what they saw as Robinhood’s “inadequate” liquidity in the lead-up to the meme-stock mania. Robinhood CEO Vlad Tenev himself described a liquidity issue in a February 2021 interview as an inability to “meet your capital requirements or your deposit requirements,” which means an institution is “essentially dead.” But while he said the company “likely could have faced a liquidity issue in the future” if it hadn’t restricted trading, Tenev believed the company met its capital and deposit requirement.

Iorio also disputed “the notion that Robinhood’s customer agreement gives it unfettered right to restrict trading for any reason, at any time,” him and his partner later wrote. 

Batista’s lawyers alleged negligent and intentional interference with prospective economic advantage and breaches of contract, fiduciary duty, and an implied covenant of good faith and fair dealing. 

Following the decision, Batista’s lawyers wrote on their website that they had found eight other cases that had gone through the arbitration process related to Robinhood’s decision to halt trades last January, and that Robinhood had won all of them. “There are at least five other cases related to the trading restrictions against other online broker-dealers where claims were denied,” the lawyers added, noting that many were filed without the help of a lawyer.


“Now, we know at least one FINRA arbitrator believes that Robinhood is responsible for that investor’s losses when it unilaterally restricted trading and use of its platform,” the lawyers wrote. “We believe this is a significant victory for retail investors because it shows that FINRA rules and protections extend to all investors, including those who are younger and have self-directed accounts.”

“There is no rule that says future FINRA arbitration panels must follow the precedent of this award and reach the same conclusion that the arbitrator in this case reached,” they continued. “However, this award shows that there may be a potential road for investors to recover their losses and that online broker-dealers, like Robinhood, may be held liable even if the investor bringing the claim is young and is trading ‘meme stocks’ on their own.”

Today, Iorio has reason to suspect that “millions” of users were negatively affected by Robinhood’s decisions in January 2021, he said. 

 Since the meme-stock mania, Robinhood has struggled to grapple with a number ofissues, including growing competition, a plummeting stock price, and the threat of an SEC ban on “payment for order flow,” which accounts for 80 percent of Robinhood’s revenue. At a minimum, Iorio said he hopes Robinhood never again leaves investors like Batista in the lurtch. 

“Hopefully, Robinhood has learned their lesson,” Iorio said.

Batista said the nearly $30,000 will be put to good use. It will help him pay for daycare for his three-year-old daughter and jumpstart his trucking business, which he recently started.   

“It’s going to help a lot,” he said. “It’s definitely going to help me a lot.”