If you used the Robinhood trading app between 2015 and 2020, you may be eligible for a cash payment from a class action settlement. This legal settlement concerns allegations regarding the platform’s ‘Payment for Order Flow’ (PFOF) practices and how they affected the execution prices of customer trades. Understanding your rights and the steps required to file a claim is essential for receiving your share of the settlement fund.
Understanding the Robinhood Order Flow Settlement
The settlement stems from a series of legal actions alleging that the brokerage platform failed to provide its customers with the best possible execution prices for their trades. According to the lawsuits, the platform prioritized receiving payments from market makers over ensuring that users received the most favorable prices available on the market.
While the company has not admitted to any wrongdoing, they agreed to a multi-million dollar settlement to resolve these claims. This fund is intended to compensate users who may have been financially impacted by these order-routing practices during the specified period. For many users, this represents an opportunity to recover a portion of the costs associated with their historical trading activity.
Who Is Eligible for the Settlement?
Eligibility for this settlement is based on specific criteria related to when you used the platform and what types of trades you executed. Generally, the ‘Settlement Class’ includes individuals who meet the following requirements:
- You must have had a brokerage account with the platform between January 1, 2015, and December 31, 2020.
- You must have placed at least one equity or options trade during this timeframe.
- Your trades must have been subject to the order-routing practices described in the litigation.
Most eligible users should have received an email or a physical notice in the mail. These notices often contain a unique ‘Claim ID’ or ‘Control Number,’ which simplifies the process of filing your claim online. If you believe you are eligible but did not receive a notice, you can still submit a claim manually by providing proof of your account history.
How to File Your Claim Step-by-Step
Filing a claim for a class action settlement is typically a straightforward process that can be completed online. Follow these steps to ensure your application is submitted correctly and on time.
1. Locate Your Notice
Check your email inbox for a message regarding the ‘Order Flow Settlement.’ This email will contain the official link to the settlement website and your unique identification numbers. Having these numbers ready will make the form much faster to complete.
2. Visit the Official Settlement Website
Navigate to the authorized settlement portal. It is important to only use the official site to protect your personal information. Once there, look for the ‘Submit a Claim’ button or tab.
3. Enter Your Information
Fill out the required fields, which usually include your name, current mailing address, and the Claim ID provided in your notice. If you do not have a Claim ID, you may need to provide the email address associated with your brokerage account during the eligibility period.
4. Choose Your Payment Method
Most modern settlements offer several ways to receive your funds. You can typically choose between a digital payment (such as PayPal, Venmo, or a digital prepaid card) or a traditional paper check sent via mail. Digital options are usually processed faster than physical checks.
5. Submit and Save Your Confirmation
After reviewing your details for accuracy, submit the form. Make sure to save or print the confirmation page that appears afterward. This page will contain a confirmation number that you will need if you ever need to check the status of your claim.
How Much Money Can You Expect?
The amount of money each person receives is not a fixed flat fee. Instead, the payout is calculated based on several factors related to your trading volume and the total number of people who file valid claims. This is known as a ‘pro-rata’ distribution.
Factors that influence your payment include the total number of shares or options contracts you traded during the class period. Users who traded more frequently or in higher volumes will likely receive a larger portion of the settlement fund. Additionally, because the settlement fund is a set amount, the more people who file claims, the smaller the individual payments become.
Important Deadlines to Remember
In any class action settlement, timing is critical. There are three main dates you should be aware of to ensure you don’t lose your right to compensation.
- Claim Filing Deadline: This is the last day you can submit your form to be eligible for a payment. Claims submitted after this date are usually rejected.
- Exclusion Deadline: If you wish to sue the company individually for these specific issues, you must ‘opt-out’ or exclude yourself by this date. By participating in the settlement, you waive your right to bring a separate lawsuit.
- Objection Deadline: If you disagree with the terms of the settlement, you must submit a formal objection by this date for the court to consider your concerns.
Always check the official settlement website for the specific dates applicable to this case, as deadlines can occasionally be extended by the court.
Why Was There a Settlement?
The core of the issue involves how the brokerage industry handles trades. When you click ‘buy’ or ‘sell,’ the broker sends that order to a market maker. Market makers often pay brokers for the right to execute those trades. This is called Payment for Order Flow.
While PFOF is a common industry practice, regulators and plaintiffs argued that the platform did not properly disclose this to users. Furthermore, they alleged that the platform did not fulfill its duty of ‘best execution,’ which requires brokers to seek the most favorable terms for customer orders. The settlement was reached to address these concerns and provide a resolution for affected users without the need for a lengthy trial.
Conclusion
Taking a few minutes to file a claim for the Robinhood order flow settlement is a simple way to ensure you receive any compensation you are owed. By following the steps outlined above and keeping an eye on the filing deadlines, you can successfully navigate the process. Remember to keep your contact information updated with the settlement administrator so you receive your payment promptly once the distribution begins. For more information on protecting your digital finances and understanding your rights as a consumer, explore our other helpful guides on online services and financial tools.