The Rosen Law Firm, P.A. has clarified the status of the proceedings in the lawsuit against Robinhood over the January 2021 short squeeze.

The Counsel filed a status report on September 4, 2024 in response to a request by Chief Judge Cecilia M. Altonaga of the Florida Southern District Court. The Court needed more information because the settlement was reached with several of the plaintiffs only, whereas clarification was needed as to how the proceedings stand for the rest of the plaintiffs.

The Rosen Law Firm, P.A. is formerly Lead Counsel for the putative class and counsel for former Lead Plaintiff Blue Laine-Beveridge and former Named Plaintiffs Abraham Huacuja, Ava Bernard, Brendan Clarke, Brian Harbison, Cecilia Rivas, Doi Nguyen, Joseph Gurney, Marcel Poirier, Sandy Ng, Santiago Gil Bohórquez and Thomas Cash.

In the report submitted on September 4, 2024, the Counsel argues that all pre-trial activities have ceased. As the Court had denied class certification, once the plaintiffs named in the operative complaint settled their claims, all pre-trial activities necessarily ceased.

There are no other active cases in the Federal Securities Law Tranche, the Counsel adds.

Importantly, Counsel understands from discussion with Robinhood that the overwhelming majority of the remaining individual plaintiffs are Robinhood customers who are subject to arbitration clauses that Robinhood will now seek to enforce in light of the denial of class certification.

The Counsel suggests that if the Court seeks further certainty with respect to the position of other plaintiffs whose actions were consolidated into the class, they could be given a deadline to submit their positions to the Court about how their cases ought to proceed.

On May 28, 2024, Robinhood Markets, Inc., Robinhood Financial LLC, and Robinhood Securities, LLC and Plaintiffs Blue Laine-Beveridge, Abraham Huacuja, Ava Bernard, Brendan Clarke, Brian Harbison, Cecilia Rivas, Doi Nguyen, Joseph Gurney, Marcel Poirier, Sandy Ng, Santiago Gil Bohórquez, and Thomas Cash provided notice to the Court that the Parties have reached a settlement.

The Consolidated Class Action Complaint (CCAC) in this lawsuit contains two claims for relief. Count I alleges that Robinhood manipulated the prices of the Affected Stocks in violation of section 9(a) of the Securities Exchange Act of 1934. Count II alleges an identical theory, but it relies on section 10(b) and rule 10b-5 promulgated thereunder.

• Count I contains two subclaims under sections 9(a)(2) and 9(a)(4), respectively. Plaintiffs allege that Robinhood violated section 9(a)(2) by intentionally manipulating the market to artificially depress the prices of the Affected Stocks. As for section 9(a)(4), Plaintiffs allege that Robinhood misstated or omitted material facts to mislead investors into thinking that it did not have a liquidity problem — a problem that would cause Robinhood to lose investors, customers, money, and relatedly, the chance at a lucrative initial public offering.
• Count II alleges that Robinhood manipulated the market when it (1) raised margin requirements (2) canceled purchase orders for the Affected Stocks, (3) closed out options in AMC and GME early, and (4) prohibited and restricted purchases of the Affected Stocks on its platform. These actions allegedly “created a false impression of actual demand for the Affected Stocks” and “artificially increased supply of the Affected Stocks.

In August 2022, the Court partially dismissed the complaint but left the bulk of the claims to which Robinhood had to respond.