Robinhood faces amended complaint in short squeeze lawsuit
Robinhood may face an amended complaint over the January 2021 short squeeze. This becomes clear from documents filed by a group of traders on July 12, 2022 in the Florida Southern District Court.
The documents, seen by FX News Group, indicate that there is newly discovered evidence seen as important by the traders.
Let’s recall that this lawsuit targets Robinhood Markets, Inc. and two of its wholly owned subsidiaries, Robinhood Financial, LLC and Robinhood Securities, LLC.
The plaintiffs bring this action as a class action pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of persons or entities who held common stock in AMC Entertainment Holdings, Inc. (“AMC”), Bed Bath & Beyond Inc. (“BBBY”), BlackBerry Ltd. (“BB”), Express Inc. (“EXPR”), GameStop Corp. (“GME”), Koss Corp. (“KOSS”), Tootsie Roll Industries Inc. (“TR”), or American Depositary Shares of foreign-issuers Nokia (“NOK”) and trivago N.V (“TRVG”) as of the close of trading on January 27, 2021, and sold at a loss between January 28, 2021, and February 4, 2021.
Robinhood is accused of violations of the Exchange Act for imposing restrictions on the trading of the above-mentioned stocks.
Now, Lead Plaintiff Blue Laine-Beveridge, named Plaintiffs Abraham Huacuja, Ava Bernard, Brandon Martin, Brendan Clarke, Brian Harbison, Cecilia Rivas, Garland Ragland Jr., Joseph Gurney, Santiago Gil Bohórquez, and Trevor Tarvis, based on newly discovered evidence, move the Court for an order setting a date for Plaintiffs to propose an amended pleading to Defendants.
The traders note that on June 24, 2022, the House Committee on Financial Services’ Majority Staff issued a report entitled: “GAME STOPPED: How the Meme Stock Market Event Exposed Troubling Business Practices, Inadequate Risk Management, and the Need for Regulatory and Legislative Reform.”
The Report is the product of a 16-month congressional investigation into the events that are the focal point of this litigation. The Report cites to, inter alia, extensive documentary evidence and testimony from those persons and entities that have personal knowledge of the relevant events.
Based upon this newly discovered evidence, the traders intend to amend the operative Consolidated Class Action Complaint to add new allegations further supporting their right to recovery under the Exchange Act claims alleged.
Robinhood is referenced throughout the Report’s 138 pages and 698 footnotes. “Key Finding #1,” comprising 60 pages and 340 footnotes, is solely devoted to an in-depth analysis of Robinhood’s statements and actions.
The Report cites to relevant evidence heretofore unknown to Lead Counsel – e.g., screenshots of Robinhood texts and Slack chains, quotations from internal Robinhood documents, witness testimony, interviews with senior Robinhood and DTCC executives, letters to the Committee from Robinhood’s counsel, and a Committee briefing by the DTCC.
All this information, according to the traders, provides support to the price manipulation and scheme claims. Lead Counsel is diligently analyzing the Report and intends to propose amendments to the Complaint – the first and only complaint filed by Lead Plaintiff – by August 5, 2022.