Electronic trading major Interactive Brokers Group, Inc. (NASDAQ:IBKR) has just posted its SEC filing for the second quarter of 2021, with the document containing an update on the “short squeeze” antitrust litigation.
Beginning in late January 2021, more than three dozen federal class action lawsuits were filed in different jurisdictions against various brokers and other market participants claiming that the defendants acted improperly in restricting trading in the shares of and options on GameStop Corp. and other companies that were subject to unusual trading in January 2021 in what has been referred to as the “Reddit-related short-squeeze”.
Most of these cases assert federal antitrust claims, including alleging an illegal antitrust conspiracy among the defendants, as well as various state and federal securities-related claims. IB LLC and its affiliates have been named as defendants in several of these class action lawsuits.
The cases were consolidated into a multidistrict litigation (MDL), and were transferred to the Southern District of Florida on April 1, 2021 for pre-trial proceedings. By the Order dated May 18, 2021, the Court divided the cases into four tranches: (1) antitrust claims (“Antitrust Tranche”); (2) state-law claims against Robinhood entities (“Robinhood Tranche”); (3) state-law claims against other defendants (“Other Broker Tranche”); and (4) federal security law claims (“Federal Securities Tranche”). The same Order appointed lead plaintiffs’ counsel for the Antitrust, Robinhood, and Other Broker Tranches.
The defendants’ motions to dismiss for those cases are due on August 30, 2021. The pleading dates for the Federal Securities Tranche will not be set until lead plaintiffs’ counsel for that case is appointed.
Interactive Brokers comments:
“The Company believes that the claims asserted against IB LLC and its affiliates lack merit on their face and the Company intends to file, at the appropriate time, a motion to dismiss any class action that might name IB LLC and its affiliates as defendants”.
Let’s recall that, on January 28, 2021, Interactive Brokers placed certain stock option trading into liquidation only. The reason – the market volatility. The company put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets. In addition, long stock positions required 100% margin and short stock positions required 300% margin. A couple of days later, the broker abandoned the restrictions.