contract-law finance
Have brokerages like Robinhood broken contracts with their customers by refusing to execute orders?
<p>The following question is related to <a href="https://law.stackexchange.com/q/60604/17620">this one</a>. However, my question regards the contractual duty whilst the linked one considers the brokerage's obligation to the state.</p>
<p>Some brokerage firms like Robinhood refuse to honor orders buying Game Stop stocks. Is this a violation of contract? What specific clause do the brokerages like Robinhood invoke to do this?</p>

<h2>No</h2>
<blockquote>
<ol start="16">
<li>Restrictions on Trading.</li>
</ol>
<p>I understand that Robinhood may, in its discretion, prohibit or restrict the trading of securities, or the substitution of securities, in any of My Accounts.</p>
</blockquote>
<p>Doing this is explicitly permitted by the <a href="https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%20Customer%20Agreement.pdf" rel="nofollow noreferrer">contract</a>.</p>

<p>It depends on some other determinations.  If it is determined that Robinhood has engaged in illegal market manipulation, and that they created the trading restrictions for these purposes, then no clause of their contract can allow this.  Any contract to engage in an illegal behavior is void.  Since the contract (the <a href="https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%20Customer%20Agreement.pdf" rel="nofollow noreferrer">link</a> to which can be already found in <a href="https://law.stackexchange.com/a/60709/11306">Dale's answer</a>) contains the usual severability clause</p>
<blockquote>
<p>If any provisions or conditions of this Agreement are or become inconsistent with any present or future
law, rule, or regulation of any applicable government, regulatory or self-regulatory agency or body, or are
deemed invalid or unenforceable by any court of competent jurisdiction, such provisions shall be deemed
rescinded or modified, to the extent permitted by applicable law, to make this Agreement in compliance
with such law, rule or regulation, or to be valid and enforceable, but in all other respects, this Agreement
shall continue in full force and effect.</p>
</blockquote>
<p>the rest of the contract remains in effect.  It remains in effect despite the fact that the clause which allows Robinhood to restrict trading is not in effect (for the purposes of market manipulation).</p>
