U.S. District Court Judge Cecilia Altonaga in Miami dismissed some allegations against the Robinhood last year but is allowing others in a proposed investor class-action lawsuit to move forward.
Robinhood must face market manipulation claims this year that arose from the ‘meme stock’ frenzy in early 2021.
The broker had allegedly colluded with market maker Citadel and removed the buy button, preventing retail investors from buying stocks such as AMC and GameStop.
US District Judge Cecilia Altonaga said in her ruling Thursday that the case raises “interesting legal questions”.
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Robinhood faces scrutiny more than a year later
U.S. District Court Judge Cecilia Altonaga in Miami said in the ruling that investors in GameStop Corp, AMC Entertainment Holdings Inc and seven other stocks can proceed with a proposed class action lawsuit alleging the restrictions artificially increased the stocks’ supply.
The lawsuit was one of several cases brought against Robinhood after it temporarily restricted its customers from buying AMC and GameStop as they began to surge in share price.
Citadel, who to this date is short on the ‘meme stocks’, allegedly colluded with Robinhood the night prior to the trading restrictions.
The U.S. House Committee on Financial Services published a press release in July stating Robinhood and Citadel Securities engaged in ‘blunt’ negotiations before the trading of ‘meme stocks’ occurred.
On January 28th, 2021, Robinhood routed orders to six market makers for equities: Citadel Securities, G1 Execution Services, Morgan Stanley, Two Sigma Securities, Virtu, and Wolverine.
All of which are short on AMC and GameStop.
But despite the continued claims to this date, it leaves you wondering.
Is Robinhood a scapegoat?
Could Robinhood simply be taking the blame for everything that occurred last year, allowing market makers to get away with market manipulation?
See, there’s a connection between Judge Cecilia Altonaga and a defendant’s law firm.
Altonaga’s husband George Mencio, is a partner to Holland and Knight, the defendant of Two Sigma Securities in this case.
This creates a major conflict of interest.
I’d love to learn what you think, leave a comment below.
You can learn more about the conflicts of interest surrounding judge Altonaga here.
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