Robinhood wins dismissal of shareholder lawsuit over 2021 IPO

FAN Editor

A U.S. judge on Friday dismissed a lawsuit accusing Robinhood Markets Inc. of misleading investors about the online brokerage’s financials and growth prospects when conducting its 2021 initial public offering.

U.S. District Judge Edward Chen in San Francisco found no proof that disclosures in Robinhood’s IPO materials were false or misleading or that declines in key metrics shortly before the company went public in July 2021 were historically extraordinary.

He said Robinhood’s warnings about future growth were “not particularly robust,” but were sufficient.

“Plaintiffs thus failed to plead that Robinhood did not disclose ‘material factors’ that would make an investment in Robinhood speculative or risky,” Chen wrote.

DOJ TO SEIZE $465M OF ROBINHOOD SHARES TIED TO FTX FOUNDER

Shareholders in the proposed class action said Robinhood had concealed “severe deterioration” in the two months before the Menlo Park, California-based company’s IPO.

They said this included the number of people who actively used its platform, how much revenue it generated, assets under custody and a 90% decline in cryptocurrency trading volume.

Shareholders said Robinhood’s stock price fell as much as 82% to $6.81 last June from the $38 IPO price as the company became, in the words of a JPMorgan analyst, “a growth company without the growth.”

PANERA AMONG RESTAURANT COMPANIES LOOKING TO TEST IPO DEMAND

Chen also dismissed claims against Robinhood Chief Executive Vladimir Tenev, other company officials and the IPO underwriters led by Goldman Sachs and JPMorgan.

The plaintiffs were led by Vinod Sodha, a psychiatrist from Beverly Hills, California, and his daughter Amee Sodha, a doctor from Millburn, New Jersey. Chen gave them permission to file an amended complaint.

Lawyers for the plaintiffs did not immediately respond to requests for comment. Robinhood and its lawyers did not immediately respond to similar requests.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Robinhood reported on Wednesday a loss for 2022 of $1.03 billion, or $1.17 per share, on net revenue of $1.36 billion.

The case is Sodha et al v. Robinhood Markets Inc et al, U.S. District Court, Northern District of California, No. 21-09767.

Free America Network Articles

Leave a Reply

Next Post

Alec Baldwin attorneys seek to reduce possible penalty in Rust movie set manslaughter case

Baldwin’s attorneys filed a motion saying a specific firearm enhancement, which carries a mandatory five-year jail sentence, doesn’t apply to his case. Free America Network Articles