Robinhood nears a settlement and dismissal of the 2021 meme stock lawsuit, boosting HOOD stock significantly.
A settlement is nearing completion between Robinhood and the investors who filed a lawsuit against the trading platform in 2021 regarding its decision to suspend trading of specific meme stocks, including GameStop.
It is anticipated that the Robinhood meme stock lawsuit will be dismissed and settled within two weeks. In addition, the HOOD stock increased substantially in response to the recent update.
As per a document submitted in Florida Southern District Court on Tuesday, May 28, 2024, the legal representatives of Robinhood declared their involvement in the settlement with the investors who were impacted.
In addition, the process of resolution is nearly concluded. As a result, Robinhood anticipates that the litigation will be dismissed within the following fortnight, pending the completion of the settlement.
In the filing, however, no specifics regarding the settlement were disclosed. The plaintiff in the 2021 Robinhood lawsuit is Blue Laine-Beveridge. The plaintiff charged Robbie Hood with engaging in market manipulation, which allegedly caused investors to suffer significant financial losses.
Furthermore, the grievance alleged that Robinhood “illicitly manipulated market prices” by imposing a purchase restriction on particular equities from January 28 to February 4, 2021. Furthermore, according to the lawsuit, Robinhood “eradicates tens of billions of dollars in equity” from investors in meme stock.
The stocks that were impacted were well-known companies such as GameStop and AMC Entertainment (AMC). Furthermore, investors who engaged in the trading of securities of Bed Bath & Beyond, BlackBerry, Nokia, Trivago, Koss, Express Inc., and Tootsie Roll were also adversely affected.
Additionally, this litigation filed by an investor is a component of a larger legal dispute that spans several U.S. jurisdictions and pertains to the conduct of Robinhood throughout the meme stock craze.
The announcement of the settlement comes on the heels of United States District Judge Cecilia Altonaga’s April 19, 2024 denial of the investors’ motion to file a new motion for class certification. A comparable denial was observed by them in November of the preceding year.
Retail investors are well-aware of the popularity of meme stocks such as AMC and GameStop, which are frequently influenced by social media trends. In January 2021, GameStop’s stock price increased substantially as a result of a short squeeze.
This resulted in substantial losses for hedge funds and other short sellers, whereas certain retail investors experienced extraordinary profits. A lawsuit was filed against Robinhood at the time for suspending GME trading.
Most of the credit for this movement went to Keith Gill, also known as “Roaring Kitty,” who reinstated himself on the social media platform X on May 13, 2024, where he shared a sequence of mysterious memes.
The anticipation that his return elicited among investors resulted in GameStop stock culminating on May 14 at $48.75. The close attained its greatest level since late 2021.
Since then, however, the stock price has decreased by over 50%, concluding at $21.24 on Wednesday, May 29th, an 8.68% decrease. Moreover, in after-hours trading, the stock experienced an additional 2.17% decline, reaching $20.78. In contrast, Robinhood stock closed Wednesday at $21.08, representing a 3% increase.
