In a May 28 filing, Robinhood’s lawyers indicated that the company is finalizing a settlement with investors and expects to resolve the case within two weeks.
The investors, led by Blue Laine-Beveridge, claimed that Robinhood manipulated the market and caused financial losses by restricting trades in GameStop, AMC, and other popular stocks.
From January 28 to February 4, 2021, Robinhood restricted trading to meet clearinghouse deposit requirements, sparking customer outrage and regulatory scrutiny.
This lawsuit is among several Robinhood faces over its handling of the meme stock surge. Robinhood denies any wrongdoing, stating the restrictions were necessary for protection.
The settlement follows US District Judge Cecilia Altonaga’s rejection of the investors’ motion for class certification in April, denying a similar request earlier in November.
Robinhood’s shares, which have fallen significantly since their IPO last year, gained 3% on Wednesday, closing above $21. This year, HOOD shares are up over 65%, though down 35% from their IPO price.
Robinhood Dominates in Resurgence of Meme Stocks
This month saw a resurgence in meme stocks, fueled by the cryptocurrency market. Despite past criticism, Robinhood re-emerged as a leader in this trend.
CEO Vlad Tenev noted that May 14 was one of the biggest trading days in a year, with daily equities trading volume reaching $5 billion. April’s total monthly volume was $70.7 billion, a drop from the previous month’s $87.7 billion. By April 2023, Robinhood handled just $38.9 billion in equities trading volume.
A single tweet reignited the meme stock frenzy in 2024. Keith Gill, known as “Roaring Kitty,” posted a meme indicating things were getting serious, sparking the frenzy.
GME shares soared by nearly 500% at one point but settled with a 90% gain in May, the highest since August 2023.
Robinhood also announced its first share buyback plan, intending to repurchase $1 billion over the next 2-3 years.
