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Robinhood wins dismissal of shareholder lawsuit over 2021 IPO

By Jonathan Stamp

(Reuters) – A US judge on Friday dismissed a lawsuit accusing Robinhood Markets Inc of misleading investors about the online broker’s financials and growth prospects in the course of its 2021 IPO.

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.

They said this included the number of people actively using their platform, how much revenue they generated, assets under custody and a drop in trading volume cryptocurrencies by 90%.

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,” according to a JPMorgan analyst without growth”.

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. Robinhood and its attorneys also did not immediately respond to similar requests.

Robinhood on Wednesday 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, U.S. District Court, Northern District of California, No. 21-09767.

(Reporting by Jonathan Stempel in New York; Editing by Kirsten Donovan and Leslie Adler)

Source: Crypto News Deutsch

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