Jonathan Stempel

(Reuters) – A U.S. Judge dismissed a lawsuit alleging wrongful conduct Robinhood Markets Inc (NASDAQ) and other brokerages wrongly prevented retail investors from purchasing fast-rising, “meme stocks,” which triggered a selloff.

On Wednesday, Cecilia Altonaga, the Chief Judge of Miami’s Federal Court in Miami, found that there was no evidence of any illegal conspiracy to stop social media-fueled trade. GameStop Corp (NYSE:), AMC Entertainment, (NYSE:) Holdings Inc. Bed Bath & Beyond Inc (NASDAQ: ) and six additional stocks

The proposed class action was brought by investors who claimed that Citadel Securities LLC and brokerages conspired to stop a “short squeeze”, which caused billions of dollar losses for Citadel, and other hedge funds betting on declining stock prices.

Investors claimed that they had no choice but to exit the market at plunging prices because of January’s trading restrictions.

Altonaga, however, stated that in her 51 page decision the investors were “far from” providing evidence of an antitrust conspiracy despite emails between senior Citadel and Robinhood officials that gave “some credence to” their claims.

“(A)re some vague and ambiguous email exchanges between two businesses in an otherwise lawful, continuing business relationship sufficient to allow plaintiffs to make their claims beyond the realm of conceivable to plausible?” Altonaga wrote. “The court doesn’t think so.”

Altonaga also dismissed related claims against E*Trade Financial (NASDAQ:) Corp and four other defendants.

Frank Schirripa (a lawyer for investors) stated on Thursday that the investors were disappointed and would be amending their complaint over the coming weeks.

Robinhood released the following statement.

Citadel expressed satisfaction with the decision. E*Trade declined to comment. Robinhood is also being accused in a separate class action.

Investors have been fueling the meme stock frenzy by using online forums, such as Reddit (NYSE)).

Because of the COVID-19 pandemic so many people traded online, using brokerages which had removed trading commissions.

In a recent report, the U.S. Securities and Exchange Commission stated that volatility was a good thing for markets. However, the regulator didn’t suggest any policy changes.

This case is called In re January 2020 Short Squeeze Trading Litigation. U.S. District Court Southern District of Florida No. 21-md-02989.