In early 2021, as stocks like GameStop (GME) took off and became part of a short squeeze craze, stock trade platform Robinhood (HOOD) gained intense notoriety after it restricted users from trading GME and other stocks. It was a move which drew the ire of much of the platform’s community and even resulted in Robinhood being called up for a hearing by the US Senate over its actions. Now, Robinhood may be held accountable for its actions in early 2021. A judge recently denied the company’s motion to dismiss market manipulation allegations against it.
The dismissal of Robinhood’s motion was finalized this week, as reported by Reuters. U.S. District Court Judge Cecilia Altonaga in Miami denied Robinhood’s motion dismiss allegations related to its restriction of GME, AMC, and other popular stock trading in early 2021. This decision means that investors in those stocks can move forward with a class-action lawsuit alleging that Robinhood’s restrictions on trade artificially depressed stock values. It’s one of several lawsuits that have been filed against Robinhood over the course of the past year over its decision to halt stock trade during the craze.
While this may leave Robinhood open to a number of allegations against it, the company has been dealing with several lawsuits as is. Previously, Judge Altonaga presided over several other rulings in relation to Robinhood, including dismissing claims that the company conspired to protect its investors by unlawfully halting the r/WallStreetBets-organized short squeeze that costed hedge funds billions of dollars in losses. The judge also dismissed claims of negligence which caused financial damage to its customers.
Even so, with this recent ruling, Robinhood may find itself in court on several more fronts. The ruling to deny its motion to dismiss market manipulation claims means Robinhood is likely to see those claims move forward in court. Such being the case, it seems Robinhood may also face allegations that it violated federal rules regarding securities fraud. As the company continues to deal with consequences of its 2021 actions, stay tuned as we continue to cover this and further GME stories, here at Shacknews.
TJ Denzer posted a new article, Judge denies Robinhood (HOOD) motion to dismiss market manipulation allegations
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