A total of 62 companies, including Robinhood and Interactive Brokers, targeted in a multi-district lawsuit about the January short squeeze seem confident that the Court will dismiss the action. This becomes clear from a status update filed with the Florida Southern District Court on June 2, 2021.

The document, seen by FX News Group, provides details on the latest developments in a large-scale litigation, which consolidates 57 cases concerning the January short squeeze.

These actions share factual questions arising from trading restrictions imposed by Robinhood and other brokers in late January 2021 in response to a dramatic rise in trading and share prices for a group of “meme stocks,” such as GameStop and AMC Entertainment.

The frenetic trading in these stocks by retail traders allegedly was spurred by members of a Reddit forum called “r/WallStreetBets,” who realized that, as the value of these securities increased, several major hedge funds and institutional investors that had taken short positions on these securities would be exposed to potentially ruinous losses (i.e., they were subject to a “short squeeze”).

Beginning on January 28, 2021, however, certain on-line trading platforms primarily used by the retail traders – in particular, Robinhood – restricted the ability of retail investors to purchase the relevant securities. Plaintiffs allege that these trading restrictions created a one-way sell situation and resulted in a steep decline in share prices for the meme stocks, which in turn caused plaintiffs economic injury and allowed the various institutional investors to cover their short positions in these securities.

All the actions in this litigation arise from the trading restrictions imposed by the on-line trading platforms.

Nearly every action asserts similar claims for breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and negligence. Numerous actions also assert causes of action under antitrust, securities, and state consumer protection laws.

The “mega” litigation will proceed with four groups, or “tranches,” of claims, including:

• claims brought under the antitrust laws (the “Antitrust Tranche”);
• state-law claims against the Robinhood entities and Robinhood-related Defendants (the “Robinhood Tranche”);
• statelaw claims against other-broker dealer Defendants and other related Defendants (the “Other Broker Tranche”); and
• claims under the federal securities laws (the “Federal Securities Tranche”).

The defendants intend to move for a discovery stay pending resolution of the amended pleadings. Plaintiffs oppose any stay and would request that the issue be resolved promptly to avoid any unnecessary delay.

The defendants submit that all discovery should be stayed pending the Court’s ruling on the anticipated motions to dismiss. Based on Defendants’ review of the complaints filed to date, the Court’s resolution of the motions to dismiss likely will dispose of the entire action, or at least one or more tranches of cases, the companies targeted in this lawsuit say.

The list of defendants includes:

• Interactive Brokers Corp
• Interactive Brokers, LLC
• IBG, LLC
• IBG Holdings, LLC
• IG Group Holdings PLC
• M1 Finance, LLC
• Maplelane Capital, LLC
• Melvin Capital Management, LP
• Merrill Edge
• Merrill Lynch, Pierce, Fenner, Smith
• Ally Financial Inc.
• Morgan Stanley Smith Barney LLC
• Alpaca Securities, LLC
• Open to the Public Investing, Inc.
• Apex Clearing Corporation
• Point72 Asset Management, L.P.
• Robinhood Crypto, LLC
• Robinhood Financial LLC
• Robinhood Markets, Inc.
• Robinhood Securities, LLC
• Candlestick Capital Management L.P.
• Cash App Investing LLC
• Charles Schwab & Co., Inc.
• The Charles Schwab Corporation
• Citadel Enterprise Americas, LLC
• Citadel Execution Services, Inc.
• Citadel LLC
• Citadel Securities, LLC
• Citadel, EFT, Inc.
• Sequoia Capital Operations LLC
• D1 Capital Partner, L.P.
• Square Inc.
• Square, LLC
• Stash Financial, Inc.
• TD Ameritrade Clearing, Inc.
• TD Ameritrade Holding Corp
• TD Ameritrade, Inc.
• Tastyworks, Inc.
• Dough LLC
• The Depository Trust & Clearing Corporation
• E Trade Asset Management, Inc.
• E Trade Financial Corp
• ETrade Financial Holdings, LLC
• ETrade Securities LLC
• Trade Republic
• Trading 212 Ltd.
• Trading 212 UK Ltd.
• FF Trade Republic Growth, LLC
• Webull Financial, LLC
• Financial Securities, LLC
• Firstrade Securities, Inc.
• eToro USA Securities, Inc.
• Free Freetrade, LTD.
• Freetrade, Ltd.
• Fumi Holdings, Inc.