Feb 10 (Reuters) – A U.S. choose on Friday dismissed a lawsuit accusing Robinhood Markets Inc (HOOD.O) of deceptive traders in regards to the on-line brokerage’s financials and development prospects when conducting its 2021 preliminary public providing.
U.S. District Decide Edward Chen in San Francisco discovered no proof that disclosures in Robinhood’s IPO supplies had been false or deceptive, or that declines in key metrics shortly earlier than the corporate went public in July 2021 had been traditionally extraordinary.
He stated Robinhood’s warnings about future development had been “not significantly strong,” however had been enough.
“Plaintiffs thus did not plead that Robinhood didn’t disclose ‘materials components’ that will make an funding in Robinhood speculative or dangerous,” Chen wrote.
Shareholders within the proposed class motion stated Robinhood had hid “extreme deterioration” within the two months earlier than the Menlo Park, California-based firm’s IPO.
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They stated this included the quantity of people that actively used its platform, how a lot income they generated, property beneath custody, and a 90% decline in cryptocurrency buying and selling quantity.
Shareholders stated Robinhood’s inventory value fell as a lot as 82% to $6.81 final June from the $38 IPO value as the corporate turned, within the phrases of a JPMorgan analyst, “a development firm with out the expansion.”
Chen additionally dismissed claims in opposition to Robinhood Chief Govt Vladimir Tenev, different firm officers, and the IPO underwriters led by Goldman Sachs and JPMorgan.
The plaintiffs had been led by Vinod Sodha, a psychiatrist from Beverly Hills, California, and his daughter Amee Sodha, a physician from Millburn, New Jersey. Chen gave them permission to file an amended criticism.
Legal professionals for the plaintiffs didn’t instantly reply to requests for remark.
Cheryl Crumpton, a Robinhood lawyer, stated the corporate stays dedicated to offering “full and correct info” to its traders, and is happy the “meritless” lawsuit was dismissed.
Robinhood shares closed down 10 cents at $9.98 on Friday. Two days earlier, the corporate reported a loss for 2022 of $1.03 billion, or $1.17 per share, on internet income of $1.36 billion.
The case is Sodha et al v Robinhood Markets Inc et al, U.S. District Courtroom, Northern District of California, No. 21-09767.
Reporting by Jonathan Stempel in New York; Enhancing by Leslie Adler and Rosalba O’Brien
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