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

A U.S. choose dismissed a lawsuit accusing Robinhood Markets Inc and different brokerages of wrongly stopping retail buyers from shopping for fast-rising “meme stocks,” triggering a sell-off.

In a choice on Wednesday, Chief Choose Cecilia Altonaga of the federal court docket in Miami discovered no proof of an unlawful conspiracy to chop off social media-fueled buying and selling of GameStop Corp, AMC Leisure Holdings Inc, Mattress Bathtub & Past Inc and 6 different shares.

Buyers within the proposed class motion stated the brokerages and Citadel Securities LLC colluded to halt a “short squeeze” that was inflicting billions of {dollars} of losses for Citadel and hedge funds that had been betting on falling stock costs.

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

However Altonaga stated in her 51-page determination that the buyers fell “far short” of offering direct proof of an antitrust conspiracy, regardless of emails amongst senior Robinhood and Citadel executives that lent “some credence” to their claims.

“(A)re a few vague and ambiguous emails between two firms in an otherwise lawful, ongoing business relationship enough to nudge plaintiffs’ claims across the line from conceivable to plausible?” Altonaga wrote. “The court thinks not.”

Altonaga additionally dismissed associated claims in opposition to E*Commerce Monetary Corp and 4 different defendants.

Frank Schirripa, a lawyer for the buyers, stated on Thursday they had been disillusioned however anticipated to amend their grievance within the subsequent few weeks.

Robinhood stated in a press release: “This further confirms that the conspiracy theory of collusion has no basis in fact.”

Citadel stated it was happy with the choice. E*Commerce declined to remark. A separate proposed class motion accuses Robinhood of negligence.

The meme stock frenzy has been fueled by buyers utilizing on-line boards resembling Reddit and Twitter.

Many traded from dwelling as a result of of the COVID-19 pandemic, via brokerages that had eradicated buying and selling commissions.

Final month, the U.S. Securities and Alternate Fee stated in a report that markets basically labored properly in the course of the volatility. The regulator didn’t counsel coverage modifications.

The case is In re January 2021 Brief Squeeze Buying and selling Litigation, U.S. District Courtroom, Southern District of Florida, No. 21-md-02989.

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