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Robinhood seeks to toss fraud lawsuit over meme stock trading restrictions -Breaking

by Mike Robinson

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© Reuters. Robinhood Markets, Inc. logo seen during a Wall Street event after company’s IPO, New York City, U.S.A, on July 29, 2021. REUTERS/Andrew Kelly

Jody Godoy

(Reuters) – Robinhood Markets Inc (NASDAQ: ) requested a Miami Federal Judge to dismiss a lawsuit that alleged the retail brokerage had engaged in fraud and market manipulation by limiting trading in “meme stocks”, last year.

Robinhood stated in Friday’s motion that the temporary limitations enacted during a rallies on social media in Jan 2021 were publically announced, and thus not deceptive.

A request to comment was not answered by an attorney representing the investors.

A class action lawsuit is being proposed to collect losses incurred by traders who purchased shares in nine businesses, which includes GameStop Corp (NYSE 🙂 and AMC Entertainment NYSE 🙂 Holdings Inc. Robinhood’s restrictions existed between Jan. 28th-2021.

Robinhood’s users were unable to purchase certain stocks until its minimum deposit reached $3 billion due to increased demand. Some stocks were also restricted temporarily by Robinhood.

Robinhood moved to dismiss the complaint. Robinhood claimed that there is no plausible allegation by investors that Robinhood was able to make a profit off the restricted share prices.

A related suit was dismissed by Chief Judge Cecilia Altonaga, accusing Robinhood of illegally conspiring against a short squeeze that caused billions in losses to hedge funds bet on falling stock price.

It is In Re January 2021 Shortsqueeze Trading Litigation. U.S. District Court Southern District of Florida. 21-md-02989.

Laurence Rosen, The Rosen Law Firm

For Robinhood: Samuel Danon of Hunton Andrews Kurth; and Kevin Orsini of Cravath, Swaine & Moore

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