The following question is related to this one. However, my question regards the contractual duty whilst the linked one considers the brokerage's obligation to the state.
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?
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 link to which can be already found in Dale's answer) contains the usual severability clause
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or body, or are deemed invalid or unenforceable by any court of competent jurisdiction, such provisions shall be deemed rescinded or modified, to the extent permitted by applicable law, to make this Agreement in compliance with such law, rule or regulation, or to be valid and enforceable,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.
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).
