US Appeals Court Dismisses Class-Action Lawsuit against Robinhood
A US federal appeals court has dismissed a class-action lawsuit against Robinhood Markets over its restrictions on trading 13 meme stocks in early 2021. The lawsuit was filed by 16 investors who claimed that Robinhood’s trading restrictions prevented them from purchasing meme stocks during a short squeeze, resulting in potential profits and share price decline.
Key Points:
- Robinhood successfully argued to dismiss the complaint as the plaintiffs failed to state a claim.
- The US appeals court upheld the decision, stating that Robinhood was within its legal rights to impose trading restrictions.
- The initial short squeeze was triggered by users of the /wallstreetbets subreddit targeting stocks like GameStop and AMC Entertainment.
- Robinhood’s Q2 results showed a profit, but its crypto revenue declined by 18%.
- $11.5 million in crypto asset investments remained unchanged at the end of the quarter.
Hot Take: The dismissal of the lawsuit is a win for Robinhood, affirming the company’s right to impose trading restrictions. However, the decline in crypto revenue raises concerns about the future profitability of Robinhood’s cryptocurrency offerings.
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