About a month after Robinhood and Citadel challenged the amended antitrust complaint against them, the plaintiffs in a multidistrict litigation (MDL) related to the January 2021 short squeeze have submitted their response at the Court.

Let’s recall that, according to the plaintiffs, this case involves a collusive agreement to restrict individual investors from exercising control over their trades and trading accounts. Robinhood and Citadel are accused of having hatched an anticompetitive scheme to restrict Retail Investors’ access to specific securities in the stock market, to suppress the prices of these securities, and to prevent the market from operating freely and fairly.

The complaint further alleges that Robinhood and Citadel entered into an illegal agreement to implement this scheme and committed a series of overt acts in furtherance of the conspiracy. The agreement was implemented, effective and caused its intended purposes, causing hundreds of millions in dollars in damages to the Plaintiffs and the Class they represent.

In February, Robinhood and Citadel sought to dismiss the amended complaint. Now, the traders have responded to the defendants’ arguments.

The traders claim that the defendants challenge the sufficiency of the Amended Complaint on incorrect grounds.

First, Defendants argue that the ample allegations contained in the Amended Complaint amount only to ordinary business communications between two business partners and that their conduct was otherwise innocent. This is is wrong, the traders say, arguing that they plausibly allege specific actions of Defendants’ executives before and after the trading restrictions, a pattern of suspicious communications before and after the imposition of the trading restrictions, and the unprecedented nature of the restraints, which when viewed as a whole, without dismembering it into parts, a jury can support the inference of an anticompetitive agreement.

The plaintiffs note their allegations of market conditions that made the market susceptible to anticompetitive and unlawful collusion. The traders insist that the defendants’ alternative explanations of their conduct with facts outside the Amended Complaint only serve to identify factual disputes, inappropriate to resolve at this juncture.

Second, the traders claim that the defendants’ motion to dismiss largely rehashes the arguments levied against Plaintiffs initial consolidated class action complaint. Plaintiffs have heard the Court’s concerns and addressed them in the Amended Complaint. According to the traders, Robinhood and Citadel seem to largely ignore their new allegations.

Third, Defendants argue that regardless of whether the Amended Complaint sets forth a cognizable antitrust claim, the Amended Complaint cannot continue because Plaintiffs’ claims are preempted by the securities’ law. The plaintiffs disagree, saying that there is no repugnancy between antitrust law and securities law here. Even assuming arguendo that there were, Congress has already determined that Plaintiffs’ antitrust claims should move forward by embedding into the Dodd-Frank Act an expansive savings clause applicable to Plaintiffs’ claims.

Finally, the traders note that Robinhood and Citadel mischaracterize what investigation has occurred, and lean heavily on a report prepared by the SEC’s staff, which by its own terms, is of limited precedential value and does not purport to be the conclusive results of an investigation.