News - Complaining investors lose against Robinhood

By Ted Maas

Complaining investors lose against Robinhood

A class action lawsuit against Robinhood for restricting trading in Gamestop stock has been dismissed.

In the spring of 2021, the so-called short squeeze of GameStop shares, among others, caused turbulence in traditional financial markets. Retail investors, driven primarily by the subreddit WallStreetBets, propelled GameStop's (GME) share price from less than US$3 to more than US$482 within a few months - driving institutional investors to ruin. Other so-called meme stocks of distressed companies, such as AMC Entertainment, American Airlines Group, Blackberry, Bed, Bath and Beyond and Trivago, were also sent to unprecedented highs. The neobroker Robinhood, which also operates in the crypto sector, intervened and suspended trading of 13 shares - much to the chagrin of investors.

16 of them filed a lawsuit - and must now accept a legal setback. Because Robinhood "had the right to do exactly what it did" and was not legally required to protect investors. Robinhood had and has the legal to restrict trading in securities and to refuse transactions, added Judge Britt Grant, who was assigned to the case.

This is not the first time an investor lawsuit has not yielded the desired result. Back in January 2022, Robinhood got a dismissal of the case in court. The court then said the plaintiffs had not filed a claim. Whether the 16 investors will now go to the Supreme Court remains to be seen. In any case, it is unlikely that the U.S. Supreme Court will take up the case.

Earlier, Robinhood CEO Vladimir Tenev was in the news because of his statements surrounding DOGE. According to Tenev, DOGE could become the currency of the Internet if implemented on X.

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