Buyers pursuing authorized motion towards Robinhood over buying and selling restrictions imposed in early 2021 have confronted one other setback in courtroom after the Florida Southern District Courtroom rejected the request for sophistication certification by the plaintiffs on Nov. 13, 2023.
Chief Choose Cecilia M. Altonaga mentioned that after totally contemplating the written submissions, file, and related legislation, the plaintiffs’ movement was rejected as a result of they may not persuade the courtroom that problems with individualized reliance wouldn’t be prevalent.
Robinhood is a platform that gives commission-free buying and selling for shares, ETFs, choices, and cryptocurrencies. Customers can commerce these monetary devices through its app or web site with out incurring conventional charges.
The plaintiffs aimed to certify a class asserting market manipulation claims underneath federal securities legal guidelines towards Robinhood Markets, Inc., Robinhood Monetary LLC, and Robinhood Securities, LLC.
The lawsuit facilities on accusations of market manipulation by Robinhood, stemming from its buying and selling limitations in early 2021 during the “meme stock” short squeeze. Notably, heightened market volatility in January 2021 led regulators to extend deposit necessities for clearing brokers, together with Robinhood, to mitigate the dangers related to unexecuted trades.
Robinhood couldn’t meet the elevated deposit necessities and pursued an alternate resolution to fulfill regulators. The corporate succeeded when regulators granted a waiver for the deposit necessities, contingent on Robinhood implementing restrictions on its prospects’ skill to commerce particular shares.
The platform attributed its restrictions to market volatility, vehemently denying any liquidity points. Plaintiffs declare the platform manipulated the market by imposing restrictions, presenting “half-truths” about volatility whereas conveniently omitting any acknowledgment of liquidity challenges.
Robinhood urged the courtroom to reject class certification, citing deficiencies within the class representatives and asserting that individualized problems with reliance and damages will overshadow frequent considerations. The plaintiffs contended that their representatives are enough, and the case is appropriate for sophistication certification.
The courtroom acknowledged that, for probably the most half, the plaintiffs have proven that the case and their representatives are appropriate for sophistication therapy. Nonetheless, they may not persuade the Courtroom that problems with individualized reliance wouldn’t be prevalent.