Robinhood, others win dismissal of meme stock ‘short squeeze’ lawsuit

by Mansi
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Nov 18 (Reuters) – A U.S. choose disregarded a lawsuit accusing Robinhood Markets Inc (HOOD.O) and different brokerages of wrongly stopping retail buyers from shopping for fast-rising “meme stocks,” triggering a promote-off.

In a choice on Wednesday, Chief Judge Cecilia Altonaga of the federal courtroom docket in Miami determined no evidence of an unlawful conspiracy to reduce off social media-fueled buying and selling of GameStop Corp (GME.N), AMC Entertainment Holdings Inc (AMC.N), Bed Bath & Beyond Inc (BBBY.O) and 6 different stocks.

Investors withinside the proposed magnificence motion stated the brokerages and Citadel Securities LLC colluded to halt a “quick squeeze” that become inflicting billions of greenbacks of losses for Citadel and hedge finances that have been making a bet on falling inventory prices.

The buyers stated the overdue January buying and selling curbs left them “no option” however to promote at plummeting prices.

But Altonaga stated in her 51-web page choice that the buyers fell “a long way quick” of supplying direct proof of an antitrust conspiracy, in spite of emails amongst senior Robinhood and Citadel executives that lent “a few credence” to their claims.

“(A)re some indistinct and ambiguous emails among companies in an in any other case lawful, ongoing commercial enterprise courting sufficient to nudge plaintiffs’ claims throughout the road from potential to plausible?” Altonaga wrote. “The courtroom docket thinks now no longer.”

Altonaga additionally disregarded associated claims in opposition to E*Trade Financial Corp and 4 different defendants.

Frank Schirripa, a attorney for the buyers, stated on Thursday they have been disillusioned however anticipated to amend their grievance withinside the following couple of weeks.

Robinhood stated in a statement: “This in addition confirms that the conspiracy concept of collusion has no foundation in fact.”

Citadel stated it become thrilled with the choice. E*Trade declined to comment. A separate proposed magnificence motion accuses Robinhood of negligence.

The meme inventory frenzy has been fueled with the aid of using buyers the use of on-line boards including Reddit and Twitter.

Many traded from domestic due to the COVID-19 pandemic, via brokerages that had removed buying and selling commissions.

Last month, the U.S. Securities and Exchange Commission stated in a file that markets basically labored properly all through the volatility. The regulator did now no longer advise coverage changes.

The case is In re January 2021 Short Squeeze Trading Litigation, U.S. District Court, Southern District of Florida, No. 21-md-02989.

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