Robinhood Asks Court to Toss Class Action Deriding Memecoins
Robinhood says class action lawsuit fails to uncover undisclosed public information
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Robinhood is pushing anew to dismiss a lawsuit claiming the company failed to properly disclose information ahead of its IPO — purportedly extending to its crypto trading activities.
Lawyers for Robinhood on May 12 filed a motion to dismiss the long-running class action lawsuit.
The US publicly traded company’s motion follows a February court ruling that found there was no proof that Robinhood supplied investors with false or misleading IPO materials in 2021.
The plaintiffs in the case, filed in federal court San Francisco, were given the opportunity to file an amended complaint, according to US District Judge Edward Chen.
Robinhood’s latest motion appears to be aiming to close the case for good, which would bookend a rocky period for the company. Its stock through Tuesday’s close in New York was down 21.5% over the last 12 months, though it has stabilized and was up about 1% on the year.
Plaintiffs in court documents have alleged that Robinhood failed to disclose the rise of “meme stocks” and memecoins, including dogecoin (DOGE) and GameStop.
“This new theory — materializing for the first time in Plaintiffs’ third try at this case — fails,” Robinhood’s lawyers wrote in their motion. “As an initial matter, Plaintiffs ignore the fact that the so-called ‘meme stock’ trading frenzy of early 2021, along with its impact on Robinhood’s business, was one of the most widely reported news events of the year.”
Robinhood filed for an initial public offering (IPO) in the summer of 2021 on the heels of the meme stock frenzy in early 2021.
The lawsuit against Robinhood claims that the increase in crypto trading and the following decline were not properly disclosed by Robinhood.
Lawyers for Robinhood say that the “significant increase in cryptocurrency trading volume in early 2021 — along with its subsequent decline — was extensively covered in the news and on social media and thus known to all reasonable investors.”
In April, Robinhood settled with multiple states — including California— for $10 million in penalties related to technical and operational failures that hurt retail investors.
Robinhood is not alone in its battle to dismiss a lawsuit centered around meme coins or stocks. In April, Elon Musk pushed to dismiss a lawsuit that claimed he pumped dogecoin as part of a pyramid scheme.
Robinhood did not immediately respond to a request for comment.
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