Robinhood was alleged to have provided false information.
However, the US judge rejected the plaintiffs' accusations.
Robinhood
Markets Inc. (NASDAQ:HOOD), a California-based financial services company, can sigh in relief after the US judge decided to dismiss a lawsuit accusing
the company of misleading retail investors during an initial public offering
(IPO) almost two years ago.
Robinhood Wins 2021 IPO
Lawsuit
Judge
Edward Chen of the US District Court in San Francisco found no evidence that
the information published by Robinhood in its prospectus and disclosure
materials was incorrect, false or misleading. He also rejected accusations that
key financial metrics examining the company's health had fallen precipitously
moments before the IPO in July 2021.
Referring
to the individual warnings issued by Robinhood, the judge states that they were
not "particularly robust", but were "sufficient to negate a
claim of misleading omissions."
"Plaintiffs
thus failed to plead that Robinhood did not disclose 'material factors' that
would make an investment in Robinhood speculative or risky," the judge
added in its decision published on 10 February 2023.
The charge
against Robinhood came before the court on 17 December 2021 and was filed by
Philip Golubowski. The plaintiff purchased Robinhood shares and claimed to have
suffered a loss due to information made available by the company that may have
been misleading.
The
misleading information purportedly related to the number of active users, the
value of assets under management, revenue generated and the volume generated by
cryptocurrency trading. Robinhood's shares lost 82% in June last year, falling
to $6.81 from an IPO price of $38.
Additionally, the judge dismissed charges against Vladimir Tenev, the CEO of the company, and the
IPO underwriters led by JPMorgan and Goldman Sachs.
Watch the FMTV interview with Jaime Rogozinski, the Founder of Reddit's WallStreetBets.
Robinhood's Court
Skirmishes
Robinhood
is a company that shot to fame coincided with the Covid-19 pandemic,
near-unprecedented rises in the financial markets and intense speculation among
retail investors. This explosive mix has resulted in Robinhood facing legal
action for potential misconduct on several occasions in the past.
Earlier the
same year, the family of a 20-year-old student, who committed suicide thinking
he incurred losses of over $700,000 in his Robinhood account, sued the trading
platform. Alex Kearns had misread financial statements and thought he had lost
over $730,000 on options trading. However, the negative balance referred to
available buying power in his trading account.
In 2021,
Robinhood became a participant in regulatory investigations on multiple fronts.
The SEC and FINRA were investigating the 2020 service outage and the suicide of
the trader mentioned above. At the time, the firm secured $26 million to cover
potential settlements or fines. In December 2020, Robinhood paid $65 million to
settle the charges relating to misleading customers about revenue sources.
Robinhood Published Q4
2022 Financials
Last week,
Robinhood reported that in the three months that ended December 2022, it increased
its total net revenue by 5% to $380 million. However, transaction-based
revenues slid 11% to $186 million, and cryptocurrency revenues fell 24% to $39
million.
"We
stayed focused in the fourth quarter on serving customers, growing our
business, and driving long-term shareholder value," said Robonhood's CFO,
Jason Warnick. "We continued to deliver on our product roadmap and kept
our costs lean."
Meanwhile,
the board of Robinhood agreed to repurchase 55 million shares in the company
bought by an entity controlled by Sam Bankman-Fried (SBF), Emergent Fidelity
Technologies, in May 2022. SBF held a 7.6% stake in Robinhood, having bought
$648 million worth of shares, which are now valued at $578 million.
Robinhood
Markets Inc. (NASDAQ:HOOD), a California-based financial services company, can sigh in relief after the US judge decided to dismiss a lawsuit accusing
the company of misleading retail investors during an initial public offering
(IPO) almost two years ago.
Robinhood Wins 2021 IPO
Lawsuit
Judge
Edward Chen of the US District Court in San Francisco found no evidence that
the information published by Robinhood in its prospectus and disclosure
materials was incorrect, false or misleading. He also rejected accusations that
key financial metrics examining the company's health had fallen precipitously
moments before the IPO in July 2021.
Referring
to the individual warnings issued by Robinhood, the judge states that they were
not "particularly robust", but were "sufficient to negate a
claim of misleading omissions."
"Plaintiffs
thus failed to plead that Robinhood did not disclose 'material factors' that
would make an investment in Robinhood speculative or risky," the judge
added in its decision published on 10 February 2023.
The charge
against Robinhood came before the court on 17 December 2021 and was filed by
Philip Golubowski. The plaintiff purchased Robinhood shares and claimed to have
suffered a loss due to information made available by the company that may have
been misleading.
The
misleading information purportedly related to the number of active users, the
value of assets under management, revenue generated and the volume generated by
cryptocurrency trading. Robinhood's shares lost 82% in June last year, falling
to $6.81 from an IPO price of $38.
Additionally, the judge dismissed charges against Vladimir Tenev, the CEO of the company, and the
IPO underwriters led by JPMorgan and Goldman Sachs.
Watch the FMTV interview with Jaime Rogozinski, the Founder of Reddit's WallStreetBets.
Robinhood's Court
Skirmishes
Robinhood
is a company that shot to fame coincided with the Covid-19 pandemic,
near-unprecedented rises in the financial markets and intense speculation among
retail investors. This explosive mix has resulted in Robinhood facing legal
action for potential misconduct on several occasions in the past.
Earlier the
same year, the family of a 20-year-old student, who committed suicide thinking
he incurred losses of over $700,000 in his Robinhood account, sued the trading
platform. Alex Kearns had misread financial statements and thought he had lost
over $730,000 on options trading. However, the negative balance referred to
available buying power in his trading account.
In 2021,
Robinhood became a participant in regulatory investigations on multiple fronts.
The SEC and FINRA were investigating the 2020 service outage and the suicide of
the trader mentioned above. At the time, the firm secured $26 million to cover
potential settlements or fines. In December 2020, Robinhood paid $65 million to
settle the charges relating to misleading customers about revenue sources.
Robinhood Published Q4
2022 Financials
Last week,
Robinhood reported that in the three months that ended December 2022, it increased
its total net revenue by 5% to $380 million. However, transaction-based
revenues slid 11% to $186 million, and cryptocurrency revenues fell 24% to $39
million.
"We
stayed focused in the fourth quarter on serving customers, growing our
business, and driving long-term shareholder value," said Robonhood's CFO,
Jason Warnick. "We continued to deliver on our product roadmap and kept
our costs lean."
Meanwhile,
the board of Robinhood agreed to repurchase 55 million shares in the company
bought by an entity controlled by Sam Bankman-Fried (SBF), Emergent Fidelity
Technologies, in May 2022. SBF held a 7.6% stake in Robinhood, having bought
$648 million worth of shares, which are now valued at $578 million.
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
FCA Chief Calls for Regulatory Reset: The Goal Is Not “To Step in When Things Go Wrong”
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The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams.
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The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams.
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