A group of traders and Robinhood reached a settlement regarding the Federal Securities Class of the January 2021 lawsuit.
On May 28, 2024, Robinhood Markets, Inc., Robinhood Financial LLC and Robinhood Securities, LLC and Plaintiffs Blue Laine-Beveridge, Abraham Huacuja, Ava Bernard, Brendan Clarke, Brian Harbison, Cecilia Rivas, Doi Nguyen, Joseph Gurney Poirier, Sandy Ng, Santiago Gil Bohórquez and Thomas Cash notified the Court that the parties have reached a settlement of the Named Plaintiffs’ claims under the Federal Securities Class.
The parties are in the process of finalizing the settlement, after which the parties will designate the severance. The parties expect the settlement and dismissal to be finalized within the next 14 days.
In light of their settlement, the parties are asking the Court to stay all proceedings under the Federal Securities Class.
The consolidated class action complaint (CCAC) in this action contains two claims for relief. Count I alleges that Robinhood manipulated the prices of the affected stocks in violation of Section 9(a) of the Securities Exchange Act of 1934. Count II alleges the same theory, but relies on Section 10(b) and Rule 10b-5 posted below.
- Count I contains two subclaims under sections 9(a)(2) and 9(a)(4), respectively. Plaintiffs allege that Robinhood violated section 9(a)(2) by intentionally manipulating the market to artificially depress the prices of the Affected Shares. As to section 9(a)(4), the plaintiffs allege that Robinhood falsely omitted or omitted material facts to mislead investors into believing it did not have a liquidity problem — a problem that would cause Robinhood to lose investors, customers , money and about , the chance at a lucrative initial public offering.
- Count II alleges that Robinhood manipulated the market when it (1) increased margin requirements (2) canceled purchase orders for the affected stocks, (3) closed out options on AMC and GME early, and (4) prohibited and restricted purchases of affected Shares on its platform. These actions allegedly “created a false impression of actual demand for the affected shares” and “artificially increased the supply of the affected shares.
In August 2022, the Court partially dismissed the complaint, but left most of the claims for Robinhood to answer.