NEW YORK, Aug 12 — Stock trading platform Robinhood Markets Inc HOOD.O must face market manipulation claims over restrictions it placed on trading during last year’s “meme stock” rally, a US judge ruled on Thursday.
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.
She previously dismissed claims that the company and other brokerages illegally conspired to halt a “short squeeze” that was causing billions of dollars of losses for hedge funds that were betting on falling stock prices. The judge also dismissed retail investors’ claims that Robinhood was negligent and breached its duty to customers.