Robinhood, the widely-used trading platform, is on the verge of reaching a settlement with investors who sued the company for its decision to halt trading on certain meme stocks, including GameStop, in 2021.
As per a filing made on May 28 in a Miami federal court, Robinhood's legal team mentioned that the settlement with the group of investors is close to being finalized and is expected to be concluded and dismissed within the next two weeks.
Details of the settlement were not disclosed in the filing, and neither Robinhood nor its legal representatives, nor the investors' counsel, responded to requests for comment.
The investors, led by Plaintiff Blue Laine-Beveridge, alleged that Robinhood engaged in "unlawful market price manipulation" and caused substantial losses amounting to "tens of billions of dollars of investors' equity" by selectively restricting trading on certain stocks between January 28 and February 4, 2021.
The stocks affected by these restrictions included GameStop, AMC, Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc., and Tootsie Roll.
This lawsuit primarily focused on Robinhood's purported violations of securities law and forms part of a broader legal battle across various U.S. jurisdictions concerning the company's handling of meme stocks.
The settlement comes after United States District Judge Cecilia Altonaga denied the investors' request to file a new motion for class certification on April 19.
Meme stocks, such as GameStop and AMC, derive their name from the fact that retail investors often trade them based on social media trends.
GameStop experienced a significant surge in its stock price in January 2021, attributed to a "short squeeze," resulting in substantial losses for hedge funds and short sellers, while some individual traders reaped significant profits.
The meteoric rise in GameStop's stock price was largely associated with Keith Gill, also known as "Roaring Kitty," who made a return to social media platform X in May after a hiatus of almost three years.
His reappearance and cryptic posts generated excitement among traders, leading to GameStop's stock closing at $48.75 on May 14, its highest level since late 2021, according to Google Finance.
However, GameStop's stock has since experienced a significant decline, closing down nearly 11% on May 29 at $21.24, with an additional 2% decline in after-hours trading to $20.78.
June 2024, Cryptoniteuae