- A US judge dismisses a lawsuit accusing Robinhood and other brokerages of wrongly curbing trades during this year’s “meme stock” frenzy
- Investors said the restrictions left them no option but to sell at spiralling prices
- In a decision on Wednesday, Chief Judge Cecilia Altonaga says investors fell “far short” of providing direct evidence of an antitrust conspiracy
- Frank Schirripa, a lawyer for the investors, says they were disappointed but expected to amend their complaint in the next few weeks
A US judge has dismissed a lawsuit accusing Robinhood and other brokerages of wrongly preventing retail investors from buying into fast-rising stocks during the “meme stock” frenzy earlier this year.
In a decision on Wednesday, Chief Judge Cecilia Altonaga of the federal court in Miami found no proof of an illegal conspiracy to cut off social media-driven trading of shares in GameStop, AMC Entertainment, Bed Bath & Beyond and six other companies.
Investors in the proposed class action claimed the brokerages and Citadel Securities had colluded to stop a “short squeeze” that was causing billions of dollars in losses for Citadel and hedge funds that had bet on the falling stock prices.
They argued the trading restrictions in late January left them “no option” but to sell at spiralling prices.
However, in her 51-page decision, Judge Altonaga said investors fell “far short” of providing direct evidence of an antitrust conspiracy, despite the fact that emails between senior Robinhood and Citadel executives lent “some credence” to the claims.
“Are a few vague and ambiguous emails between two firms in an otherwise lawful, ongoing business relationship enough to nudge plaintiffs’ claims across the line from conceivable to plausible?” Judge Altonaga wrote. “The court thinks not.”
Judge Altonaga also dismissed related claims against fellow online brokerage E*Trade Financial and four other defendants.
Frank Schirripa, a lawyer for the investors, said on Thursday they were disappointed but expected to amend their complaint in the next few weeks.
In a statement, Robinhood said the decision “further confirms that the conspiracy theory of collusion has no basis in fact”. However, the trading platform currently faces a separate class action that accuses it of negligence.