Meme Stock Suit Against Robinhood Is Dismissed, but Others Loom

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A federal court in Florida this 7 days dismissed just one part of a proposed 3-aspect class motion lawsuit against Robinhood and others about their roles in January’s GameStop trading frenzy. Investors alleged that brokerage corporations like Robinhood conspired with clearinghouses and the market place maker Citadel Securities to limit trading of meme shares as they shot up in rate. The judge identified otherwise.

“A bare assertion of conspiracy will not suffice,” Chief Choose Cecilia Altonaga of the United States District Court docket for the Southern District of Florida wrote in the buy dismissing the antitrust-primarily based declare. Executives at Robinhood and Citadel Securities “exchanged many imprecise and ambiguous emails” close to the time of meme-inventory investing halts, the decide mentioned, which looked “somewhat suspicious presented the contributors and their timing.”

But statements of conspiracy were being not “plausible,” the choose wrote. The corporations had a “lawful, ongoing enterprise relationship,” in which Robinhood routes consumer trades to Citadel Securities to execute and will get paid for the order stream, a widespread but from time to time contentious arrangement.

The circumstance is not closed. There are two far more tranches in this litigation, which merged promises from throughout the country. Retail traders are also proclaiming Robinhood was negligent in its obligation to buyers and violated securities legislation.

Maurice Pessah, the lead law firm on the negligence tranche, advised the DealBook newsletter that his circumstance is centered on “totally different and distinct lawful theories.” Robinhood has moved to dismiss the claims there could be a choice by the conclusion of the 12 months.