US judge says Robinhood faces market-manipulating claims over trading restrictions during the 2021 “stock meme” rally.
Robinhood Faces Class Lawsuits
Judge Cecilia Altonaga of the U.S. District Court in Miami decided that shareholders in 9 equities may file a class action case against Robinhood. AMC Entertainment Holdings Inc. (AMC.N), GameStop Corp. (GME.N), and other unique stocks were allegedly involved in the manipulation charges. These securities assert that the limitations artificially inflated the supply of the securities.
Due to how high the markets for these stocks rose during the 2021 meme surge, Robinhood Markets briefly forbade users from buying in them. This gathering and the uproar in their community served as the catalyst for the lawsuit. Hedge funds betting against these meme stocks suffered significant losses as a result of the social media rise. The short-term suspension of stock purchases in these companies also shook investor confidence in the market as a whole.
An individual consumer lawsuit against Robinhood was also brought forth by the 2020 meme movement. US users who were barred from trading on volatility due to the epidemic launched a class action complaint. According to Reuters, that lawsuit was resolved for more than $50 million back in May.
The hearing date has not been made public by either company or the court. Regarding the most recent lawsuit, Robinhood Markets Inc. is still silent.
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