Though the class action names many other financial businesses, like Citadel Securities, Charles Schwab, Melvin Capital Management and SoFi Securities, Robinhood is the main antagonist. It is a defendant in nearly all of the dozens of original actions, is facing almost all the claims and appears on nearly every page of the filings. The complaint calls Robinhood “a true amateur among institutional brokers.”

Investors taking part in the class action argue that Robinhood’s business model has a built-in conflict of interest. The company generates about 80 percent of its revenue from payment for order flow, which allows it to offer commission-free trading to users. In this arrangement, the broker sells customer orders to market-making firms (primarily Citadel Securities in Robinhood’s case) that execute the trades. Robinhood makes more from this practice than other brokers…

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