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Robinhood Exec Accused of Engaging in Insider Trading and Tipping During Memestock Frenzy



Lawyers making the allegations are also accusing Citadel Securities, which is owned by a hedge fund, of pressuring Robinhood to implement its controversial “sell only” policy.

Insider Trading and Tipping

Lawyers for several Robinhood customers filed an amended court document Wednesday that accuses one company executive of trading away his shares of AMC Theatres just two days before Robinhood severely limited trading of the stock.

“I sold my AMC today,” that executive, President and COO of Robinhood Securities Jim Swartwout, said on Jan. 26 in an internal company chat amid the height of the Memestock frenzy.

That event was spurred by a flurry of small investors throwing their cash into several struggling companies, including AMC and GameStop. As a result, share values for those companies rose to unprecedented and exponential highs.

“FYI – tomorrow morning we are moving [GameStop] to 100% – so you are aware,” Swartwout added in the chat, according to court documents. 

That part of Swartwout’s message appears to be ambiguous at best, as many people have offered somewhat varying interpretations as to what “moving [GameStop] to 100%” actually means; however, the general belief among some online is that he was trading stock on material nonpublic information (MNPI).

“Whenever we knew something non-public about any company we were potentially involved with, out came the emails from Legal saying ‘You may not trade, sign and agree here, and we’re watching you,’” Franklin Gold, a former Fidelity Investments employee, said on Twitter. “Every trade I ever made was reviewed monthly by a more senior registered principal.” 

Many online have also accused Swartwout of tipping off others to this MNPI, which had the ability to change stock prices.

This allegation is yet another bad optic for Robinhood, as insider tipping is illegal. The messages are now in the hands of a court, and it is ultimately the court’s responsibility to decide whether they are damning enough to prove illegal activity.

Lawyers Allege Citadel Pressured Robinhood

In the lawyers’ original complaint, filed last week, they accuse Citadel Securities of pressuring Robinhood to restrict trading by prohibiting customers from buying new shares of GameStop, AMC, Nokia, and Blackberry — a move that crippled the trading power of many small investors given that other brokerage services were still trading the stocks. 

Notably, Citadel Securities is a subsidiary of the hedge fund Citadel LLC. It also executes many of the orders submitted by Robinhood customers and even helped to bail out ​​GameStop short-seller Melvin Capital after it lost billions during the Memestock frenzy. 

In the court filing, lawyers provide what they claim are internal communications that seem to show tense talks between the two companies. In fact, one message from Swartwout reads, “you wouldnt believe the convo we had with Citadel. total mess.”

While it’s unclear what was actually being discussed here, the lawyers argued that this, as well as several other cryptic messages referencing meetings between the companies, is evidence of Citadel pressuring Robinhood. The theory that Citadel somehow influenced Robinhood to heavily limit trading has been popular online for months, and as a result, a number of people online have cited the lawyers’ presented evidence. 

First in the line of fire was Citadel LLC CEO Ken Griffin, who many accused of lying to Congress earlier this year when he said there was no collusion between the two companies.

In response, Citadel has held firm in its assertion that it “did not ask Robinhood or any other firm to restrict or limit its trading activity on January 27th.”

In a statement cited by the Wall Street Journal, Citadel additionally characterized the accusation as being fueled by “Internet conspiracies and Twitter mobs.” 

A Robinhood spokesperson has since echoed Citadel’s account.

“These complaints attempt to create a false narrative of collusion,” the spokesperson said. “In times of market stress, it’s normal and advisable for us to communicate even more with our market centers.” 

Essentially, she’s saying communication doesn’t equal collusion. That’s something both Robinhood and Citadel stressed during congressional hearings earlier this year when they admitted to having conversations during the frenzy but denied any foul play.

“Any allegation that Robinhood acted to help hedge funds or other special interests to the detriment of our customers is absolutely false and market-distorting rhetoric,” Robinhood CEO Tenev said in prepared testimony at the hearings.

As with the accusations against Swartwout and insider tipping, this accusation will ultimately be settled by a court; however, if lawyers want to prove their claims that Citadel influenced Robinhood’s decision-making, they’re likely going to need a lot more evidence than several ambiguous messages referring to meetings. Instead, they’ll need to provide information about what was discussed during those talks.

See what others are saying: (Marketwatch) (Wall Street Journal) (Vice)


Employees at Activision Blizzard’s Raven Software Form First Union at a Major Gaming Company



Organizers say the decision has the potential to upend labor practices in the gaming industry.

Raven Software QA Testers Win Union Bid

A group of 28 workers at Activision Blizzard subsidiary Raven Software voted to form the first-ever union at a major U.S. gaming company. 

While the Game Workers Alliance is a small union, organizers in the space say its formation represents a major shift for the gaming industry and will encourage others in the sector to follow suit.

The newly unionized workers are quality insurance (QA) testers working at the Wisconsin-based studio to develop “Call of Duty.” QA testers work to sort out any glitches in games, and the jobs are notoriously known for extreme crunch periods where staffers work long stretches of hours before a game’s release.

During crunch periods, employees are regularly given 12- to 14-hour shifts with just a few days off each month in order to meet release deadlines.

Many QA testers have said they are treated as second-class to others in the industry. They are paid much lower — often minimum wage or close to it — work on contract cycles and, as a result, feel disposable.

That particular sentiment was underscored for workers at Raven Software in December when the company ended the contracts of about a dozen QA testers. The decision prompted the remaining QA testers to hold a walkout and, shortly after that, they began organizing to form a union, which they dubbed the Game Workers Alliance.

Activision’s Battle Against Unionization Effort

Activision did not support the push for unionization and actively fought against it. The company refused to voluntarily recognize the union, and just days after the group filed a petition with the National Labor Relations Board, it moved QA testers to different departments across its properties.

Activision also announced it would convert over 1,000 temporary QA workers to full-time employees, give them a pay raise to $20 an hour, and provide more benefits. However, management said the move would not apply to the unionizing workers because, under federal law, they could not try to encourage workers from voting against unionization by offering pay hikes or benefits. Union leaders repudiated that argument.

Additionally, Activision fought against the union petition, arguing that any union would need to include all of the studio’s employees, but the Labor Board rejected the claim and let the effort proceed.

According to multiple reports, Activision management continued to push against the union in the weeks leading up to the vote. Some Raven employees told The Washington Post company leaders had suggested at a town hall meeting that unionization could hurt game development and impact promotions and benefits. The following day, the managers allegedly sent an email urging workers to “vote no.” 

On Monday, Labor Board prosecutors announced they had determined that Activision illegally threatened workers and enforced a social media policy that violated bargaining rights. Activision denied the new allegations.

The two parties will have until the end of the month to file an objection, and if none are filed, the union becomes official. It is currently unclear how Activision and Raven will respond, but they have signaled that they might not make the transition period easy for the union.

According to internal documents seen by Bloomberg, the company has repeatedly mentioned that it can take a while for a union to negotiate its first contract.

In a statement following the vote, an Activision spokesperson told The Post that the company respects the right of its employees to vote for or against a union, but added: “We believe that an important decision that will impact the entire Raven Software studio of roughly 350 people should not be made by 19 of Raven employees. We’re committed to doing what’s best for the studio and our employees.”

See what others are saying: (The New York Times) (The Washington Post) (Bloomberg)

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Uber Forks Over $19 Million in Fine for Misleading Australian Riders



The penalty is just the latest in a string of lawsuits going back years.

Uber Gets Fined

Uber has agreed to pay a $19 million fine after being sued by the Australian Competition and Consumer Commission for making false or misleading statements in its app.

The first offense stems from a company policy that allows users to cancel their ride at no cost up to five minutes after the driver has accepted the trip. Despite the terms, between at least December 2017 and September 2021, over two million Australians who wanted to cancel their ride were nevertheless warned that they may be charged a small fee for doing so.

Uber said in a statement that almost all of those users decided to cancel their trips despite the warnings.

The cancellation message has since been changed to: “You won’t be charged a cancellation fee.”

The second offense, occurring between June 2018 and August 2020, involved the company showing customers in Sydney inflated estimates of taxi fares on the app.

The commission said that Uber did not ensure the algorithm used to calculate the prices was accurate, leading to actual fares almost always being higher than estimated ones.

The taxi fare feature was removed in August 2020.

A Troubled Legal History

Uber has been sued for misleading its users or unfairly charging customers in the past.

In 2016, the company paid California-based prosecutors up to $25 million for misleading riders about the safety of its service.

An investigation at the time found that at least 25 of Uber’s approved drivers had serious criminal convictions including identity theft, burglary, child sex offenses and even one murder charge, despite background checks.

In 2017, the company also settled a lawsuit by the Federal Trade Commission (FTC) for $20 million after it misled drivers about how much money they could earn.

In November 2021, the Justice Department sued the company for allegedly charging disabled customers a wait-time fee even though they needed more time to get in the car, then refused to refund them.

Later the same month, a class-action lawsuit in New York alleged that Uber charged riders a final price higher than the upfront price listed when they ordered the ride.

See what others are saying: (ABC) (NASDAQ) (Los Angeles Times)

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Report Finds That Instagram Promotes Pro-Eating Disorder Content to 20 Million Users, Including Children



According to the study, even users hoping to recover were given eating disorder content because they were “still in Instagram’s algorithmically curated bubble.”

Instagram Promotes Eating Disorder Content

Instagram promotes pro-eating disorder content to millions of its users, including children as young as nine-years-old, according to a Thursday report from the child advocacy non-profit group Fairplay.

The report, titled “Designing for Disorder: Instagram’s Pro-eating Disorder Bubble,” studied what it called an eating disorder “bubble,” which consisted of nearly 90,000 accounts that reached 20 million unique users. The average age of the bubble was 19, but researchers found users aged nine- and 10-years-old that followed three or more of these accounts. Roughly one-third of those in the bubble were underage. 

According to Fairplay, Instagram’s parent company Meta derives $2 million in revenue a year from the bubble and another $228 million from those who follow it. 

“In addition to being profitable, this bubble is also undeniably harmful,” the report said. “Algorithms are profiling children and teens to serve them images, memes and videos encouraging restrictive diets and extreme weight loss.”

“Meta’s pro-eating disorder bubble is not an isolated incident nor an awful accident,” it continued. “Rather it is an example of how, without appropriate checks and balances, Meta systematically puts profit ahead of young people’s safety and wellbeing.”

Researchers identified the bubble by first looking at 153 seed accounts with over 1,000 followers that posted content celebrating eating disorders. Some used phrases like “thinspiration” or other slang terms like “ana” and “mia” to refer to specific eating disorders. Others included an underweight body mass index in their bios. 

Those seed accounts alone had roughly 2.3 million collective followers, 1.6 million of which were unique. Of those unique users, researchers looked at how many seed accounts each followed to determine that nearly 90,000 accounts were part of the eating disorder bubble. Those accounts totaled over 28 million followers, 20 million of which were unique.

These pages posted content ranging from memes and photos of extreme thinness to screenshots of progress on calorie counting apps. One user said they were on their third day of eating just 300 calories. 

Others, including children under the age of 13, put their current weights and goal weights in their account bios. Some wrote that they “hate food” or were “starving for perfection.”

Content’s Impact on Children

Fairplay claimed that many of those in the bubble wanted to recover but were essentially trapped in Instagram’s algorithm. 

“Many of the biographies of users in the bubble talk about wanting to or being in recovery, wanting to get ‘better’, to ‘heal’ or being aware of how unwell they were,” the report said. “However, these users are still in Instagram’s algorithmically curated bubble. They will still be feeding content from other accounts in the bubble, including the seed accounts, that normalizes, glamorizes or promotes eating disorders.”

The report also showcased the firsthand account of a 17-year-old eating disorder survivor and activist identified as Kelsey. Kelsey wrote that it was impossible to “imagine a time when the app didn’t have the sort of content that promotes disordered eating behavior.” 

“I felt like my feed was always pushed towards this sort of content from the moment I opened my account,” Kelsey continued.

“That type of content at one point even got so normalized that prominent figures such as the Kardashians and other female and male influencers were openly promoting weight loss supplements and diet suppressors in order to help lose weight.”

Kelsey said Instagram delivered that content without any relevant searches, but posts about body positivity needed to be actively sought out. 

The report concluded by arguing that there needs to be legislation that regulates platforms like Instagram by requiring them to prioritize user safety, particularly for children.

Meta and Instagram have long been accused of disregarding child safety. Last year, a whistleblower unveiled documents that revealed the company knew of the harm it posed to young people, specifically regarding body image. A Meta spokesperson told The Hill that they were unable to address the most recent allegations in Fairplay’s report.

“We’re not able to fully address this report because the authors declined to share it with us, but reports like this often misunderstand that completely removing content related to peoples’ journeys with or recovery from eating disorders can exacerbate difficult moments and cut people off from community,” the spokesperson said.

See what others are saying: (The Hill) (CNet)

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