Robinhood has won a case over the manipulative ‘meme stock’ halts of 2021 which allowed hedge funds like Citadel to make their losses back.
The 11th U.S. Circuit Court of Appeals in Atlanta ruled 3-0 in its favor regarding the trading restriction of 13 meme stocks back in 2021.
These stocks included AMC Entertainment (NYSE:AMC), GameStop (NYSE:GME) and Bed Bath & Beyond (OTCMKTS:BBBYQ), among others.
In a proposed class action, shareholders of the 13 stocks alleged that they suffered damages because they were restricted from trading.
“When Robinhood restricted its customers’ ability to buy meme stocks, it took a sizable — and perhaps justifiable — hit in the court of public opinion,” wrote Circuit Judge Britt Grant.
“But in this court, Robinhood is only accountable for specific legal duties.”
“The court’s decision echoed a ruling by Chief Judge Cecilia Altonaga in November 2021. On top of that, the Atlanta court also dismissed claims that alleged Robinhood was negligent in protecting its customers from losing money and that it unsuccessfully ensured that its “mission critical systems” worked accordingly,” reports IP.
In May, AMC CEO Adam Aron said the company was seeking to sue Robinhood after the platform had reported the movie theatre chain had filed for bankruptcy.
“What the DUCK !!!!! I am getting multiple reports that Robinhood briefly posted today that AMC filed for bankruptcy.
How can companies like Robinhood do this?
So ludicrous, so wrong, so irresponsible.
On Friday, we report Q1 earnings, and will announce our sizable cash position,” said AMC CEO Adam Aron in a statement on social media at the time.
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Conflicts of Interest Keep Wall Street Safe
Patrick McConlogue, an ex-Citadel data scientist appeared on Fox Business during the ‘meme stock’ frenzy of 2021 when retail investors created one of the biggest scares in Wall Street history.
GameStop and AMC shareholders were able to create panic on Wall Street by heavily buying shares of the overleveraged shorted stocks.
As share prices soared, short sellers experienced massive losses.
GameStop was able to put Melvin Capital out of business, but Patrick McConlogue says other hedge funds were able to make back billions in losses during the halt.
The halts allowed hedge funds to enter AMC and GameStop knowing shares would plummet, allowing them to capitalize on the deflation of the price.
Patrick says the rules of the game also heavily favor hedge funds, something retail investors have urged SEC Chairman Gary Gensler for years to change.
“The game is not fair and it never has been. Individual investors, even when operating in a swarm, are destined to lose. How do I know? I helped design the game.”
Retail investors are viewing Robinhood’s case win as an act of oppression in the financial markets.
Rules are bent however and whenever deemed necessary to keep the ball in Wall Street’s court.
But I’m curious to know your thoughts on this.
Leave a comment down below.
Also Read: Congress Now Says Not All Naked Shorts Are Illegal
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