Robinhood Hit With Class-Action Suit for Selling Order Flow (1)

Robinhood Financial LLC was sued in a proposed class action for allegedly failing to inform clients it was selling their stock orders to trading firms and effectively charging back-door commission fees.

The complaint filed Wednesday in San Francisco federal court follows the company’s $65 million settlement last week with the U.S. Securities and Exchange Commission over similar allegations.

While Robinhood touted “commission free” trading on its platform, it didn’t disclose that it relied extensively on “payment for order flow,” collecting payment from market makers in exchange for executing trades, according to the suit.

“The principal trading firms/electronic market makers in ...