Global venture capital firm New Enterprise Associates announced Wednesday morning that it had closed $3.6 billion for its latest fund. The firm was also an early investor in online trading platform Robinhood, which has recently suffered three outages. Tony Florence, general partner at New Enterprise Associates, joins “Squawk Box” to discuss the fund as well as Robinhood’s recent outages.
Free stock-trading pioneer Robinhood experienced another major outage Monday, keeping clients on the sidelines during another historic day for stocks.
“Trading is currently down on Robinhood and we’re investigating the issue,” the Silicon Valley start-up said Monday shortly after the opening bell. “We are experiencing issues with equities, options and crypto trading. We are working to resolve this issue as soon as possible.”
Around 10:30 a.m. Robinhood tweeted that the platform was partially restored and only the fractional trades service was down. However, twitter members continued to post photos of errors from their Robinhood apps.
The outage coincided with a dismal day for stocks on Monday. The major averages cratered as investors braced for the economic fallout from the coronavirus and a shocking all-out oil price war. The Dow Jones Industrial Average tanked 2,000 points, while the S&P 500 plunged 7.6%. The Nasdaq Composite fell 7.3%.
The heavy volume sell-off triggered a key market circuit breaker minutes into the opening bell. Trading was halted for 15 minutes until reopening at 9:49 a.m. ET.
Robinhood’s outage comes after days of technical problems starting on Monday, March 2, when clients missed out on the biggest one-day point gain in Dow in history. The millennial-favored app, which has about 10 million users, was plagued with glitches for two days, causing a wave of furious clients.
The company is facing legal fallout from last week’s outage. A Robinhood client based in Sarasota, Florida, filed a federal lawsuit on behalf of himself and other traders Wednesday evening. Travis Taaffe alleges that Robinhood was negligent and breached its contract by failing to “provide a functioning platform,” leaving traders unable to move money while stock markets surged.
Robinhood users took to social media to vent outrage over the technical issues. A Twitter account “Robinhood Class Action” gained more than 7,000 followers in recent days.
The trading app gained popularity with young investors by offering free stock trading in 2013; however, since then, free trading has become industry standard, with major online brokers dropping commissions last year. Many twitter users said that would be canceling their account with Robinhood due to the persistent technical issues.
Robinhood’s 44-page customer agreement outlines that it will not be responsible for “temporary interruptions in service due to maintenance, Website or App changes, or failures” and isn’t liable for extended interruptions due to failures “beyond” the company’s control.
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