Trading platform Robinhood soon to settle meme stock lawsuit with its investors

By:
on May 30, 2024
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  • Robinhood’s legal team informed a Miami federal court that the settlement process is near completion.
  • Investors led by Blue Laine-Beveridge accused Robinhood of "unlawfully manipulating market prices."
  • Robinhood's halt of meme stock trading during early 2021 market volatility sparked criticism and lawsuits.

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Robinhood is on the verge of finalising a settlement with investors who sued the trading platform for halting the trading of certain meme stocks, including GameStop, in early 2021.

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On May 28, Robinhood’s legal team informed a Miami federal court that the settlement process is near completion, with expectations for a resolution and dismissal within the next two weeks.

Details of the settlement remain undisclosed

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The court filing did not disclose the specifics of the settlement.

Efforts to reach Robinhood, its legal counsel, and the investors’ representatives for comments were unsuccessful.

The group of investors, led by Blue Laine-Beveridge, accused Robinhood of “unlawfully manipulating market prices” and causing substantial financial losses by restricting the purchase of selected stocks from January 28 to February 4, 2021.

Allegations of Robinhood’s market manipulation

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The plaintiffs argued that Robinhood’s actions “wiped out tens of billions of dollars of investors’ equity” by selectively limiting trades.

They held shares in various companies impacted by these restrictions, including GameStop, AMC, Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc., and Tootsie Roll.

The investors’ lawsuit is part of a larger wave of litigation across multiple U.S. jurisdictions regarding Robinhood’s handling of meme stocks.

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The nearing settlement comes after United States District Judge Cecilia Altonaga denied the investors’ attempt to file a new motion for class certification on April 19.

This was the second such denial, following a similar decision in November of the previous year.

The resolution of this case is anticipated to provide some closure on the contentious issue of Robinhood’s trading restrictions during the meme stock craze.

Robinhood’s controversial decision to halt trading in popular meme stocks during a period of heightened market volatility in early 2021 led to widespread criticism and multiple lawsuits.

Investors claimed these restrictions were unfair and contributed to significant financial losses.

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