Robinhood Lawsuit Over GameStop Eyes Dismissal In 2 Weeks, HOOD Stock Gains

Robinhood is inching a settlement with investors who initiated a lawsuit against the trading platform over its decision to halt trading of certain meme stocks in 2021, which include GameStop. The Robinhood meme stock lawsuit is expected to reach a settlement and dismissal in two weeks. Moreover, the HOOD stock gained significantly amid the recent update.

Robinhood GameStop Lawsuit Settlement

According to a filing made on Tuesday, May 28, 2024, in Florida Southern District Court, Robinhood’s attorneys stated that they have engaged in the settlement with affected investors. Moreover, the settlement process is nearly complete. Hence, Robinhood expects the settlement to be finalized soon, leading to dismissal of the lawsuit within the next two weeks.

However, specific details of the settlement were not disclosed in the filing. The Robinhood lawsuit, filed in 2021, is led by plaintiff Blue Laine-Beveridge. The plaintiff accused Robinhood of market manipulation that allegedly resulted in substantial financial losses for investors.

Moreover, the complaint stated that by restricting the purchase of specific stocks from January 28 to February 4, 2021, Robinhood “unlawfully manipulated market prices.” In addition, the suit contended that Robinhood “erased tens of billions of dollars in equity” from meme stock investors.

The affected meme stocks included popular ones line GameStop and AMC Entertainment (AMC). In addition, it also impacted investors involved in trading stocks of Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc., and Tootsie Roll.

Moreover, this investor lawsuit is part of a broader legal challenge across multiple U.S. jurisdictions concerning Robinhood’s actions during the meme stock frenzy. Whilst, the settlement news comes after United States District Judge Cecilia Altonaga denied the investors’ request to file a new motion for class certification on April 19, 2024. Earlier, they witnessed a similar denial in November of the previous year.

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Update On HOOD & GME Stocks

Meme stocks like GameStop and AMC are known for their popularity among retail investors, often driven by social media trends. GameStop’s stock price surged dramatically in January 2021 due to a short squeeze. This led to significant losses for hedge funds and other short sellers, while some retail investors saw massive gains. At the time, Robinhood was slapped with a lawsuit for halting the GME trading.

This movement was largely attributed to Keith Gill, also known as “Roaring Kitty,” who recently returned to the social media platform X on May 13, 2024, posting a series of enigmatic memes. His return generated excitement among traders and led to GameStop stock closing at $48.75 on May 14. This was the highest close since late 2021.

However, the stock price has since declined by more than half, closing down 10.68% on Wednesday, May 29 at $21.24. Furthermore, it witnessed an additional 2.17% drop in after-hours trading to $20.78. Meanwhile, the Robinhood stock surged 3%, closing at $21.08 on Wednesday.

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