A United States federal appeals court docket has upheld a call to dismiss an investor class motion lawsuit in opposition to on-line brokerage agency Robinhood Markets over its meme stock trading debacle in early 2021.
A complete of 16 buyers took half in a category motion lawsuit against the trading platform in September 2021, alleging the agency restricted them from buying 13 “meme shares” when hedge funds had been being quick squeezed in January 2021.
This stopped them reaping the income and in addition brought about the share costs of those shares to plummet, they alleged.
Robinhood received a movement to dismiss the criticism in January 2022, citing the plaintiff’s failure to state a declare, plaintiffs then went on to argue the choice within the U.S. appeals court docket in March 2023.
Nonetheless, it seems the buyers have hit one other setback because the appeals choose has upheld the choice to dismiss the lawsuit, with U.S. Appellate Court docket Choose Britt Grant saying the arguments lacked authorized advantage.
She defined that Robinhood “had the fitting to do precisely what they did” as a result of they weren’t legally obligated to guard these buyers from pure financial loss.
It’s because Robinhood was, and nonetheless is legally permitted to limit its prospects’ potential to commerce securities and to refuse to just accept any of their transactions, Choose Grant added.
If the buyers resolve to pursue the matter additional, their subsequent and ultimate route will probably be by way of the U.S. Supreme Court docket — the best court docket within the U.S. Nonetheless, they might want to file a petition for a “writ of certiorari,” which is a doc asking the Supreme Court docket to overview the case.
The Supreme Court docket takes on about 100-150 circumstances from over 7,000 critiques, so the plaintiff’s possibilities of having its case heard as soon as extra are seemingly slim.
The GameStop quick squeeze occurred in January 2021, which was initially triggered by customers of the /wallstreetbets subreddit.
The technique of the quick squeeze was to trigger huge losses for Wall Avenue companies shorting these explicit shares, and by doing so, profiting themselves.
One other 12 shares grew to become a part of the frenzy, together with AMC Leisure, American Airways Group, Blackberry, Mattress, Bathtub & Past, and Trivago.
GameStop shares had been nonetheless one of many largest gainers of the Reddit-fueled value pump, rising over 9,900% from $0.86 to over $86 between Apr. 2020 and Jan. 2021, according to Macrotrends.web.