An appeals court judge has ruled in favor of Robinhood's authority to enforce limitations on meme stock transactions, marking a significant development in the ongoing legal saga.
A U.S. federal appeals court has maintained the earlier decision to reject a class-action lawsuit brought by investors against Robinhood Markets, the online brokerage, in connection with the tumultuous meme stock trading events of early 2021.
Sixteen investors collectively initiated the class-action lawsuit against the brokerage platform in September 2021. They contended that Robinhood had unjustly curtailed their ability to acquire 13 "meme stocks" at a time when hedge funds were grappling with short squeezes in January 2021.
According to their claims, this action not only prevented them from reaping potential profits but also instigated a sharp decline in the stock prices of the mentioned companies.
Robinhood successfully secured the dismissal of the lawsuit in January 2022, citing the plaintiffs' failure to substantiate their claims. Subsequently, the plaintiffs brought their case to the U.S. appeals court in March 2023, aiming to contest the earlier ruling.
However, it appears that the investors have encountered another setback, as the appeals judge has upheld the decision to dismiss the lawsuit. U.S. Appellate Court Judge Britt Grant articulated that the arguments put forth by the plaintiffs were devoid of legal validity.
In her explanation, Judge Grant noted that Robinhood was within its rights to take the actions it did, as the company was not legally obliged to shield these investors from inherent economic losses.
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