Robinhood Nearing Settlement Over 2021 Meme Stock Trading Halt Lawsuit
Summary:
Robinhood is nearing a settlement with investors over their lawsuit concerning halted trading of certain meme stocks in 2021, including GameStop. Lawyers representing Robinhood confirmed that the settlement is under process with an expected completion and dismissal in the next two weeks. The lawsuit filed by the investors, which forms part of a larger case across various U.S jurisdictions, alleges that Robinhood illegally manipulated market prices, significantly impacting investors' equity.
The brokerage app Robinhood is making efforts towards finalizing an agreement with the investors who brought lawsuit against them for putting a halt to the dealing of specific meme stocks in 2021, GameStop inclusive. As stated in a legal document filed to a Miami federal court on May 28, lawyers representing Robinhood mentioned that the process of completing the settlement with the group of investors is underway, with the expectation of settlement and dismissal within the next fortnight. Unfortunately, specific details about the settlement were absent in the filing. Efforts to get comments from Robinhood, its legal team, and that of the group of investors were not successful. Accusations leveled by the investors- who included the leading Plaintiff, Blue Laine-Beveridge- claimed that Robinhood had illegally manipulated market prices drawing down the investors' equity by tens of billions of dollars, by deliberately choosing what stocks its customers could purchase between Jan. 28 and Feb 4, 2021. The injury lawsuit filed by the investors is centered around the supposed violations to securities law by Robinhood and forms part of a broader lawsuit across multiple U.S jurisdictions about the meme stock-related activities of the firm. This settlement comes on the heels of a denial by United States District Judge Cecilia Altonaga of an application by the investors to submit a fresh motion for class certification on April 19. There was also a knockback of a similar request in November of the preceding year. Retail investors are known to trade stocks such as GameStop and AMC, sometimes referred to as meme stocks, according to the trending hype on social media platforms. The largest gains from the soaring GameStop stocks in January 2021 were accrued to retail traders after a "short squeeze" of the stock dealt huge revenue loss blows to hedge funds and other short sellers. Many attribute this price movement to Keith Gill, alias “Roaring Kitty,” who recently resurfaced on X in May after almost three years of absence. By posting a number of enigmatic memes, Gill stirred traders' excitement and GME closed May 14 at $48.75— a record high since the late part of 2021 as per Google Finance. According to the same source, Google Finance, the year-to-date valuation for GameStop has shot up by about 27.5% following Gill’s posts on X. But it experienced a more than 50% drop, and on May 29, it closed almost 11% down at $21.24. This was followed by a further 2% decrease in after-hours trading to $20.78.
Published At
5/30/2024 7:36:59 AM
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