Stock trading platform Robinhood Markets must face market manipulation claims over restrictions it placed on trading during last year’s “meme stock” rally, a US judge has ruled.
US District Court Judge Cecilia Altonaga in Miami said in the ruling that investors in GameStop, AMC Entertainment Holdings and seven other stocks can proceed with a proposed class-action lawsuit alleging the restrictions artificially increased the stocks’ supply.
Shares of those companies surged to extreme highs thanks to a social media-fueled rally that eventually led Robinhood and others to restrict trading in the affected securities, infuriating retail investors and rattling market confidence. The volatility caused major losses for hedge funds that had bet against the meme stocks.
An attorney for Robinhood did not immediately reply to a request for comment.