Robinhood opposes traders’ attempt to amend complaint in short squeeze lawsuit
Robinhood has opposed an attempt by traders suing the company over the trading restrictions introduced in January 2021 to amend their complaint.
As FNG has reported, the traders claim that they have new evidence that will help them build their case against Robinhood.
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.
Earlier in July, the plaintiffs referred to newly discovered evidence to 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.”
On July 26, 2022, Robinhood Markets, Inc., Robinhood Financial LLC and Robinhood Securities, LLC submitted their response to Plaintiffs’ Motion.
Robinhood notes that the plaintiffs have not articulated what their new allegations will be. To amend their pleadings, Plaintiffs must file both a motion for leave to amend and their proposed amended pleading for the Court’s review.
Robinhood opposes the plaintiffs’ Motion as procedurally improper and intends to oppose Plaintiffs’ forthcoming motion for leave to amend the Federal Securities Tranche consolidated complaint.
According to the defendants, the plaintiffs leave Robinhood and the Court in the dark as to what their new allegations will be or how any material from the House Report will support those allegations. Instead, Plaintiffs assert in general terms that some of this material “provide[s] supports to [Plaintiffs’] price manipulation and scheme claims,” conceding that this material does not provide support to their misrepresentation claims.
Robinhood argues that there is nothing in the House Report that could save Plaintiffs’ market manipulation claims (or their misrepresentation claims). Nor are the internal Robinhood communications cited in the House Report any different in nature from those Plaintiffs already have from the complaints in other tranches, many of which Plaintiffs already included in their existing complaint.
Accordingly, because Plaintiffs do not articulate what their new allegations will be and because any amendment would be futile, the Court should deny Plaintiffs’ request for relief, Robinhood says.