Robinhood defeats investors' appeal over meme stock frenzy

Robinhood Markets on Thursday defeated an entreaty by investors implicit the banal trading platform's determination to restrict purchases of 13 "meme stocks" during a January 2021 frenzy that squeezed hedge funds.

Customers who owned stocks specified arsenic AMC Entertainment, the erstwhile Bed Bath & Beyond and GameStop claimed successful the projected people enactment that they mislaid wealth due to the fact that Robinhood stopped them from buying much as social media-fueled trading drove prices skyward.

Other holders of the stocks besides said they were harmed, due to the fact that the restrictions yet caused prices of their stocks to fall.

But successful a 3-0 decision, the 11th U.S. Circuit Court of Appeals successful Atlanta said Robinhood's modular lawsuit statement specifically authorized the restrictions, and did not suggest that Robinhood would judge each commercialized orders.

The tribunal besides dismissed claims that Robinhood was negligent successful failing to support investors from losing money, oregon failed to guarantee that its "mission captious systems" would enactment properly.

"When Robinhood restricted its customers' quality to bargain meme stocks, it took a sizable - and possibly justifiable - deed successful the tribunal of nationalist opinion," Circuit Judge Britt Grant wrote. "But successful this court, Robinhood is lone accountable for circumstantial ineligible duties."

Lawyers for the plaintiffs did not instantly respond to requests for comment. Robinhood and its lawyers did not instantly respond to akin requests.

Thursday's determination upheld a November 2021 ruling by Chief Judge Cecilia Altonaga of the Miami national court.

The meme banal frenzy has been fueled successful portion by investors utilizing online forums specified arsenic Twitter and the subreddit WallStreet Bets.

It led to a "short squeeze" that caused large losses for hedge funds betting banal prices would fall, and what Robinhood called "outsized regulatory collateral calls" for the Menlo Park, California-based institution and different brokers.

Robinhood is besides being sued by investors who sold 9 meme stocks astatine a nonaccomplishment successful precocious January and aboriginal February 2021.

Shares of Robinhood were up 3 cents astatine $10.83 astatine midday connected Thursday.

The lawsuit is In re January 2021 Short Squeeze Trading Litigation, 11th U.S. Circuit Court of Appeals, No. 22-10669.