Robinhood, the popular trading platform, is finalizing a settlement with investors who sued the company for halting the trading of certain meme stocks in 2021, including GameStop.
According to a May 28 filing in a Miami federal court, Robinhood’s lawyers stated that the settlement with the group of investors is nearly complete and is expected to be finalized and dismissed within the next two weeks.
The filing did not provide details of the settlement, and neither Robinhood, its counsel, nor the investors’ counsel responded to requests for comment.
The investors, led by Plaintiff Blue Laine-Beveridge, accused Robinhood of “unlawfully manipulating market prices” and causing “tens of billions of dollars of investors’ equity” losses by selectively restricting the stocks its users could buy between January 28 and February 4, 2021.
The affected stocks included GameStop, AMC, Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc., and Tootsie Roll.
This lawsuit focused on Robinhood’s alleged violations of securities law and is part of a broader legal action in multiple U.S. jurisdictions regarding the company’s handling of meme stocks.
The settlement follows United States District Judge Cecilia Altonaga’s denial of the investors’ request to file a new motion for class certification on April 19.
A similar request had been denied in November of the previous year.
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Meme stocks, such as GameStop and AMC, are so named because retail investors often trade them based on social media hype.
GameStop’s stock surged dramatically in January 2021 due to a “short squeeze,” causing significant losses for hedge funds and short sellers while some retail traders made substantial gains.
The surge in GameStop’s stock price was largely credited to Keith Gill, known as “Roaring Kitty,” who recently returned to social media platform X in May after a nearly three-year hiatus.
His return and cryptic posts excited traders, pushing GME’s stock to close at $48.75 on May 14, its highest since late 2021, according to Google Finance.
However, GameStop’s stock has since dropped significantly, closing down nearly 11% on May 29 at $21.24, with an additional 2% decline in after-hours trading to $20.78.
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