The suit combines more than 55 lawsuits against Robinhood and other defendants and alleges they conspired to restrain trade and entered into an anticompetitive scheme to fix, raise, stabilise, maintain or suppress the price of the relevant securities.
In October 2021, a Florida federal judge appointed a lead plaintiff in the US to lead a consolidated multidistrict litigation alleging that Robinhood and other defendants, including hedge funds such as Citadel and other market players, caused more than $10bn in market capitalisation losses as a result of these trading restrictions. These restrictions have resulted in several class action lawsuits being brought in the US against Robinhood. Read more about ‘ meme stocks’ and the implications of retail trading.Īt the end of January, online stock trading platform Robinhood imposed restrictions on the trading of GameStock and other stocks, limiting users by preventing them from buying these stocks while hedge funds and other investors were able to continue to trade as normal using other trading platforms. The short squeeze was initially and primarily triggered by users of social news website Reddit who believed GameStop was significantly undervalued, with its shares being heavily shorted by hedge funds and asset managers. In January 2021, GameStop’s stock price rose by more than 1,000% in less than a month in what has been called a ‘short squeeze’ by retail investors who targeted hedge funds and asset managers with large short positions on this stock. Beata Moskova summarises potential litigation implications for the UK financial markets arising from the GameStop ‘short squeeze’ and consequent market activity. At the beginning of 2021, the stock market experienced a trading frenzy that saw unexpected fluctuations and surges in several stocks, most notably the US companies GameStop and AMC.
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