Trading platform Robinhood is finalizing a settlement with investors who claimed they were burned by its 2021 meme stock buy block.
Robinhood is settling with the investors who filed a lawsuit against it in 2021, alleging that it halted the trading of specific meme stocks, including GameStop.
Robinhood’s attorneys filed with a federal court in Miami on May 28 that the company is “in the process of finalizing the settlement” with the group of investors and that dismissal and settlement are anticipated within the next two weeks.
The information regarding the settlement should have been included in the filing. The investor group, Robinhood, and its counsel have yet to respond to requests for comment.
Robinhood allegedly “illicitly manipulated market prices” and “wiped out tens of billions of dollars of investors’ equity” by “selectively determining” which equities its users could purchase from January 28 to February 4, 2021, according to the investors, led by lead plaintiff Blue Laine-Beveridge.
The shareholders asserted ownership in the following companies impacted by Robinhood’s action: GameStop, AMC, Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc., and Tootsie Roll.
Robinhood’s alleged securities law violations were the subject of the investor suit, part of a broader litigation in multiple U.S. jurisdictions concerning the firm’s actions about meme stocks.
The settlement was reached after the denial by United States District Judge Cecilia Altonaga on April 19 of the investors’ request to submit a revised motion for class certification. Judge Altonaga denied a comparable petition in November of the previous year.
Meme stocks, including GameStop and AMC, are traded by many retail investors in response to social media excitement.
In January 2021, GameStop shares skyrocketed after a “short squeeze” that resulted in substantial losses for hedge funds and other short sellers, whereas specific retail traders experienced noteworthy profits.
This movement was frequently attributed to Keith Gill, also called “Roaring Kitty,” who returned to X in May.
As a result of traders being enthused by the return to X following a nearly three-year absence to post a series of enigmatic memes, GME closed on May 14 at $48.75, its highest level since late 2021, per Google Finance.
Since then, it has decreased by over half, concluding at $21.24 on May 29, down nearly 11%, with after-hours trading witnessing an additional 2% decline to $20.78.
