Robinhood must face U.S. market manipulation claims over ‘meme stock’ rally, judge rules
2022.08.11 21:51
FILE PHOTO: The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company’s IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly
By Jody Godoy and Hannah Lang
(Reuters) -Stock trading platform Robinhood Markets Inc (NASDAQ:HOOD) must face market manipulation claims over restrictions it placed on trading during last year’s “meme stock” rally, a U.S. judge ruled on Thursday.
U.S. District Court Judge Cecilia Altonaga in Miami said in the ruling that investors in GameStop Corp (NYSE:GME), AMC Entertainment (NYSE:AMC) Holdings Inc and seven other stocks can proceed with a proposed class action lawsuit alleging the restrictions artificially increased the stocks’ supply.
The lawsuit was one of several cases brought against the retail trading platform after it temporarily barred customers from buying certain hot stocks in January 2021, including GameStop and AMC.
Shares of those companies surged to extreme highs thanks to a social media-fueled rally that eventually led Robinhood and others to restrict trading in the affected securities, infuriating retail investors and rattling market confidence. The volatility caused major losses for hedge funds that had bet against the meme stocks.
An attorney for Robinhood did not immediately reply to a request for comment.
