Court Allows Parts of Proposed Robinhood Class Action Case

Investors will be allowed to pursue some of their claims against Robinhood Markets Inc. stemming from a 2021 GameStop frenzy, a federal judge in Miami ruled, according to Bloomberg.

The same judge, according to the news service, also dismissed some of the allegations against Robinhood.

The case brings to the fore “interesting legal questions, convoluted by the novelty of Robinhood’s platform, but at the end of the day, plaintiffs’ market manipulation claims clear the particularized threshold,” U.S. District Judge Cecilia Altonaga wrote in her ruling, Bloomberg reported.

The news service quoted a Robinhood representative as having said the company maintains it acted appropriately while noting that the ruling was only preliminary and did not address the merits of the case.

“As we’ve previously communicated, the events of the week of January 25, 2021, were an extraordinary, once in a generation event that stressed every stakeholder in the market,” Cheryl Crumpton, associate general counsel of litigation and regulatory enforcement at Robinhood, reportedly told Bloomberg.

The trouble at issue emerged when a risk-management entity demanded $3.7 billion from Robinhood and the brokerage, unable to make the payment, stopped purchases of GameStop and other shares that soon saw their share prices drop.

Related: Second GameStop Hearing Focuses On Experts Over Usual Suspects

Robinhood faces a number of civil claims alleging different types of improper behavior, including its handling of the so-called “GameStop Short Squeeze” that burned investors who were betting the high-flying video game retailer’s stock would plunge.