Feb 10 (Reuters) – A US judge on Friday dismissed a lawsuit accusing Robinhood Markets Inc (HOOD.O) of misleading investors about the online broker’s financials and growth prospects in the course of its 2021 IPO to have.
US District Judge Edward Chen in San Francisco found no evidence that disclosures in Robinhood’s IPO materials were false or misleading, or that the decline in key metrics just prior to the company’s July 2021 IPO was historically exceptional.
He said Robinhood’s warnings about future growth are “not particularly robust,” but sufficient.
“Thus, plaintiffs have not alleged that Robinhood has failed to disclose ‘material factors’ that would render an investment in Robinhood speculative or risky,” Chen wrote.
Shareholders in the proposed class action lawsuit said Robinhood hid a “serious deterioration” in the two months leading up to the Menlo Park, Calif.-based company’s IPO.
last update
Watch 2 more stories
They said this included the number of people actively using their platform, how much revenue they generated, assets under custody and a 90% drop in cryptocurrency trading volume.
Shareholders said Robinhood’s share price fell by as much as 82% from its IPO price of $38 to $6.81 last June as the company became “a growth company with no growth,” according to a JPMorgan analyst.
Chen also dismissed lawsuits against Robinhood CEO Vladimir Tenev, other company officials and 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 medical doctor from Millburn, New Jersey. Chen gave them permission to file an amended complaint.
The plaintiffs’ attorneys did not immediately respond to requests for comment.
Cheryl Crumpton, a Robinhood attorney, said the company remains committed to providing “complete and accurate information” to its investors and is pleased that the “baseless” lawsuit was dismissed.
Robinhood shares closed up 10 cents at $9.98 on Friday. Two days earlier, the company reported a 2022 loss of $1.03 billion, or $1.17 per share, on net sales of $1.36 billion.
The case is Sodha et al v. Robinhood Markets Inc et al. 21-09767.
Reporting by Jonathan Stamp in New York; Edited by Leslie Adler and Rosalba O’Brien
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.