Robinhood Markets Inc., and associated entities moved to dismiss a consolidated complaint of the plaintiffs claiming that the trading platform violated federal securities laws through its handling of the unprecedented trading volatility for a number of “meme” stocks in January 2021. Last Friday’s motion said the plaintiffs have failed to state a claim.
According to Robinhood, the plaintiffs seek to represent a class of all U.S. investors, not just Robinhood customers, who sold shares in at least one of the volatile affected stocks during a six day trading. Their November 30 amended complaint states two claims for relief, one for market manipulation and the other for fraudulent representation.
The defendant says the causes of actions fail because “the securities laws do not prohibit the conduct alleged here.” As to the market manipulation claim, Robinhood asserts that it publicly disclosed the purchase restrictions it temporarily imposed on the volatile stocks, and as such there was no deception about its conduct, a pivotal element to the claim.
The misrepresentation claim cannot survive dismissal Robinhood says, because any alleged misstatements were made by Robinhood about itself, not about any company in which the plaintiffs were stockholders. The filing sets forth numerous other arguments including that the plaintiffs lack statutory standing and that they do not adequately plead any false or misleading statements.
On Monday, the Southern District of Florida court overseeing the MDL dismissed the “Other Broker Tranche” complaint after finding that the court lacked subject matter jurisdiction over defendant Apex Clearing Corporation. In mid-November, the court granted the defendants’ motion to dismiss the antitrust plaintiffs’ complaint, finding that it failed to plead an antitrust conspiracy.
Robinhood is represented by Hunton Andrews Kurth LLP and Cravath, Swaine & Moore LLP.