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At least 42 ‘short squeeze’ cases that resulted from the recent stock market trading frenzy around Reddit and GameStop should be combined into a multidistrict litigation, a San Francisco law firm is arguing.
The Joseph Saveri Law Firm Inc. reached out to the U.S. Judicial Panel on Multidistrict Litigation on Thursday seeking to consolidate over 40 class action lawsuits that are targeting a laundry list of brokers, fund managers and clearinghouses. These lawsuits follow the controversy that started on Jan. 28 when retail investors were blocked from buying shorted securities, such as Gamestop, AMC Entertainment, and other stocks, after a trading war between everyday investors and short-selling hedge funds.
According to the motion, all of the 42 cases, or “short squeeze actions” challenge the same defendants and same unlawful conduct related to the restriction of trading: that fund managers and online brokerages were involved in a conspiracy to fix and stabilize the prices for certain securities to prevent the trading of these securities. Robinhood is one of the trading apps that barred its traders from buying and selling GameStop in order to help major hedge funds from losing money. By blocking trades Robinhood “artificially deflated” the price, to the benefit of those shorting the stock.
“All of the other cases allege similar facts,” attorney Joseph Saveri said in an email to Law360. “It makes sense for these cases to be centralized in one court. Because many of the companies, and the wrongful acts, occurred in the Northern District of California, and the bench has substantial experience with these types of cases, it makes sense for the cases to be centralized here.”
Since there is a substantial legal overlap between the cases, transferring to a single jurisdiction will assist in speeding up the process and will help to avoid duplication of proceedings and resources, the motion contends.
Violation of Anti Competitive Laws
The “short squeeze actions” claim the same unlawful actions in violation of federal antitrust laws and regulations, state law and common law.
Each case seeks claims for damages under the Sherman Act in the form of financial damages and injunctive relief.
“We look forward to moving this case forward quickly,” Saveri said to Law360.
GameStop and other stocks’ prices have been fluctuating since the trading restrictions were announced, however, they have not reached the record highs made prior to the restrictions. GameStop went from approximately $20 in the middle of January to a record high of $483 just as trading began on Jan. 28.
The spike in GameStop and other stocks’ prices was due to the influence of day traders that were sharing messages on Reddit, an online message board. Members of a Reddit page called the Wall Street Bets were deliberately pushing prices of these troubled companies higher in order to harm the positions of some professional investors that were “short selling” the stock, or betting that the companies would fail and pocketing the profit. The Reddit members’ actions took investment experts off guard.
The first Robinhood class action lawsuit was filed Jan. 28, the very same day that Robinhood and other trading apps and exchanges noticed the volatility and suspended or blocked trades. Robinhood reportedly removed the GameStop stock from its platform.
Robinhood has grown to include more than 13 million users, and brings in hundreds of millions of dollars in investments.
Have you invested in any of these shorted stocks using any of the brokers listed in this class action lawsuit? Let us know in the comments below.
Robinhood has not yet named its counsel in the various litigations it faces, though it has reportedly hired Cravath Swaine & Moore LLP for representation.
Cheng and Sterling are represented by Joseph R. Saveri, Steven N. Williams, Christopher K.L. Young and Anupama K. Reddy of the Joseph Saveri Law Firm Inc.
The Short Squeeze Lawsuit is In re: Short Squeeze Antitrust Litigation, case number unknown, before the U.S. Judicial Panel on Multidistrict Litigation.
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21 thoughts onOver 40 ‘Short Squeeze’ Suits May Be Consolidated, Moved to San Francisco
Please add me as Robinhood robbed me as well
Ally Financial is corrupted and make you wait on 4 hours on the phone and cant do anything online. Rejected many trades without explanation. Please add me to the class action. Thank you
Add me please Robinhood robbed us and let the big guys make money while I was froze out of my own account from trading.
I have Robinhood as well and they don’t get me the right money for my stock..Please add me
Add me
Add me please thank you ? guys your awesome ?
Please add me
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Mishashah2010@gmail.com
Please add me
Was totally scammed by Robinhood on purchasing amc stock, they manipulated the numbers to benefit the big guys, totally illegal.