Retail trading platform Robinhood has announced plans to finalize a settlement with the investors who sued the company following the meme stock saga of 2021.
The lawsuit accuses the retail trading platform of malicious intent after halting meme stock trading in 2021. At the time, Robinhood halted trading stocks such as GameStop, which posted significant price gains quickly.
Robinhood Settlement Is Close to Settlement
While speaking during a May 28 filing at a federal court in Miami, the attorneys representing Robinhood said they were “in the process of finalizing the settlement.” The settlement was made with a group of investors who sued the trading firm.
Robinhood and the investors anticipate that the settlement and dismissal will happen over the next two weeks.
The filing at the Miami court did not include the details of this settlement. Moreover, the company and the investors have yet to issue more information on the settlement deal.
The settlement deal came after US District Court Judge Cecilia Altonaga turned down a bid from investors that filed the lawsuit seeking a new motion for class certification in April. The investors had made a similar request in November 2023, but it was also turned down.
Therefore, Robinhood and the investors are now contemplating a possible settlement deal with nothing left to discuss, which will now put this matter to rest.
Robinhood Accused of Market Manipulation in Meme Stock Saga
Robinhood was sued by investors in 2021 for halting trading at a time when GameStop (GME) stop was experiencing high volatility. Blue Laine-Beveridge led the investors involved in the lawsuit.
The lawsuit claimed that Robinhood manipulated market prices unlawfully. Because of its actions, investors said that Robinhood wiped out tens of billions of dollars worth of equity belonging to investors.
The investors also said Robinhood failed to act impartial as a brokerage platform. Instead, it picked the stocks users could buy between January 28 and February 4, 2021.
By doing so, it prevented investors from making returns on the stocks that had already been purchased on the platform.
The investors in this lawsuit claimed they held stocks in other companies, including AMC, GameStop, Bed Bath & Beyond, Nokia, BlackBerry, Koss, trivago, Tootsie Roll, and Express Inc.
Their holdings in these stocks were affected after Robinhood took action to halt stock trading.
Meme Stock Rally
GameStop (GME) and AMC stocks are popularly referred to as meme stocks because of the high interest they receive from retail investors. Just like speculative meme coins, the value of these stocks changes depending on the social media hype.
GME went on a massive rally in 2021, creating one of the biggest short squeezes in history. It caused enormous returns for retail traders and losses for hedge funds and short sellers.
GameStop’s association with retailers continues and recently posted another major rally.
The recent gains were associated with the return of “Roaring Kitty,” a YouTuber that triggered the 2021 GME bull run.
