A court document revealed that Robinhood is finalizing a settlement with investors who sued over its trading limits on GameStop and other stocks during the 2021 meme stock surge. In a May 28 filing in Miami federal court, the online brokerage indicated that it expects to conclude the settlement and dismiss the case within two weeks.
The trading curbs, imposed between January 28 and February 4, 2021, sparked widespread anger among users and attracted the attention of legislators and regulators.
The investors, including lead Plaintiff Blue Laine-Beveridge, alleged Robinhood “unlawfully manipulated market prices” and “wiped out tens of billions of dollars of investors’ equity” by “picking and choosing” what stocks its users could buy
Robinhood stated in the document that the trading limits were needed to meet higher deposit requirements and protect the company and its clients.
The investors claimed they held shares in GameStop, AMC , Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc. and Tootsie Roll, which were affected by Robinhood’s action.
This lawsuit is among several challenges Robinhood has faced regarding handling the meme stock episode. Despite criticism for its past actions, Robinhood has remained a prominent player in the trading sector, notably when meme stock activity surged again this month, influenced by the crypto market.
In a recent development, Robinhood’s CEO Vlad Tenev highlighted May 14 as one of the busiest trading days in the last year, with daily equities trading volume reaching $5 billion. Following a decline in April’s trading volumes, Robinhood also announced its first share buyback plan, aiming to repurchase $1 billion over the next two to three years.
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