Trade platform Robinhood is working to finalize a settlement with investors who sued it for halting trades of certain meme stocks, including GameStop, in 2021. In a filing submitted to the Miami federal court on May 28, Robinhood’s lawyers stated they are in the process of finalizing the settlement with the investor group and expect to reach an agreement and dismissal within the next two weeks.
What’s Happening on the Robinhood Front?
The filing did not include details of the settlement, and Robinhood, its counsel, and the investor group’s counsel did not immediately respond to requests for comment. Investors, including Lead Plaintiff Blue Laine-Beveridge, claimed that Robinhood illegally manipulated market prices and destroyed tens of billions of dollars in investor equity by selecting which stocks its users could buy between January 28, 2021, and February 4, 2021.
Investors claimed to own shares in GameStop, AMC, Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc., and Tootsie Roll, which were affected by Robinhood’s actions. The investor lawsuit focused on Robinhood’s alleged securities law violations and is part of a broader case across various U.S. jurisdictions related to the firm’s actions concerning meme stocks.
The settlement came after U.S. District Judge Cecilia Altonaga denied investors’ motion to file a new request for class certification on April 19. Judge Altonaga had also denied a similar request in November of last year.
Details on the Matter
GameStop and AMC stocks are referred to as meme stocks by some because many individual investors buy and sell them based on social media excitement. GameStop shares surged rapidly in January 2021 following a short squeeze, causing significant losses for hedge funds and other short sellers, while some individual investors reaped substantial gains.
Many attribute this movement to Keith Gill, also known as Roaring Kitty, who recently returned to X in May after nearly a three-year hiatus to post a series of cryptic memes. His return excited investors, and according to Google Finance, GME saw its highest level since closing at $48.75 on May 14.
Since then, it has fallen by more than half, closing at $21.24 on May 29, down about 11%; it further declined to $20.78 in after-hours trading, an additional 2% drop.
