Robinhood Asks Judge To Dismiss Class Action Lawsuits Filed For GameStop, ‘Meme’ Stock Restrictions

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Robinhood Meme Stock Class Action Lawsuit Overview: 

• Who: Robinhood and other financial service firms including Apex Clearing Corp. and Citadel Securities LLC. 
• Why: The companies are asking a judge to dismiss class action lawsuits filed against them alleging they colluded and violated antitrust laws by temporarily restricting transactions of volatile stocks, including GameStop.
• Where: The motion to dismiss was filed in Florida federal court.

Robinhood and other financial services firms are asking a Florida judge to throw out a series of class action lawsuits filed against them claiming restrictions imposed during January’s “meme stock” trading hysteria involving GameStop and other stocks of high volatility cost investors billions. 

Robinhood argued in a motion filed Monday that the company was within its legal right to suspend transactions of the stock, pointing out it was facing a $3 billion collateral deposit demand from the National Securities Clearing Corporation. 

“In order to remain in compliance with its deposit requirements, Robinhood Securities made the difficult decision to place limited restrictions on customer purchases on the small number of securities driving its deposit requirement,” the company said. 

Robinhood Lawsuits Allege Billions Lost in Meme Stock Trading Restrictions

Investors accused Robinhood and other financial institutions of violating antitrust laws when they locked them out of buying or selling AMC Entertainment Holdings Inc. and GameStop stock as the latters price soared all the way to $483. The purchase restrictions cost investors a total of more than $10 billion in market capitalization losses, the class action lawsuits allege.

Plaintiffs further allege Robinhood artificially deflated the price of GameStop stock by refusing to let consumers buy or sell it, in order to help major hedge funds who were shorting the stock from losing money. 

The Robinhood lawsuits accused the companies of negligence, gross negligence, negligence per se, and breach of fiduciary duty. 

Financial Cos Fighting Meme Stock Class Actions

Other financial service firms, including Apex Clearing Corp. and Citadel Securities LLC, have fought back against claims they colluded with Robinhood to block price growth in the “meme stocks.” 

Robinhood, meanwhile, is arguing that its customer agreement allows it to implement the kind of restrictions it put on the GameStop stock. 

“Recognizing that they have no claim for breach of contract … plaintiffs now attempt to create liability in tort where none exists under contract law,” Robinhood said. “But the law does not permit Plaintiffs to take a losing breach of contract claim and dress it up as a tort claim in order to avoid the governing provisions of the Customer Agreement.”

Were you locked out of trading GameStop or any other stock by Robinhood or another financial services firm? Let us know in the comments! 

The plaintiffs are represented by Natalia M. Salas, James L. Ferraro, James Ferraro, Jr., Bruce S. Rogow, Sean A. Burstyn and Daniel J. DiMatteo of The Ferraro Law Firm PA.

The antitrust plaintiffs are represented by Joseph R. Saveri, Steven N. Williams, Christopher K.L. Young and Anupama K. Reddy of Joseph Saveri Law Firm LLP and by Frank R. Schirripa, Kathryn Hettler, Seth Pavsner and Eugene Zaydfudim of Hach Rose Schirripa & Cheverie LLP.

Plaintiffs are also represented by lead counsel Peter Safirstein of Safirstein Metcalf LLP. 

The Robinhood Investor Lawsuits are:

Days v. Robinhood Markets, Inc., et al., Case No.  3:21-cv-00696 in the U.S. District Court Northern District Of California, San Francisco Division.

Nelson v. Robinhood Financial LLC, et al., Case No. 1:21-cv-00777, in the U.S. District Court Southern District of New York.

Gatz, et al. v. Robinhood Financial, LLC, Case No. 1:21-cv-00490, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

Nabi, et al. v. Robinhood Financial, LLC, Case No.  3:21-cv-00755 in the U.S. District Court Northern District Of California.

Simpson, et al. v. Robinhood Financial LLC, et al., Case No. 3:21-cv-00207 in the United States District Court Northern District of Texas, Dallas Division.

Read About More Class Action Lawsuits & Class Action Settlements:

• Robinhood Lawsuit Says Investors Denied Best Trading Prices
• Robinhood Sued for More Than $5M for Allegedly Sending ‘Illegal Spam Texts’
• Interactive Brokers Turned a Blind Eye to Fraud, Allowing $23M Ponzi Scheme to Continue, Class Action Alleges
• Robinhood Lost Investors $10B By Blocking Trade, Alleges Class Action Lawsuit