Sep 24, 2023  |  
 | Remer,MN
Sponsor:  WISH-TEXT.COM 
Sponsor:  WISH-TEXT.COM 
Sponsor:  WISH-TEXT.COM 
Sponsor:  WISH-TEXT.COM Craft Personalized Messages With Ease! Wish It? Text It!
Sponsor:  WISH-TEXT.COM Craft Personalized Messages With Ease! Wish It? Text It!
The Epoch Times
The Epoch Times
11 Feb 2023

NextImg:Robinhood Wins Dismissal of Shareholder Lawsuit Over 2021 IPO

A U.S. judge on Friday dismissed a lawsuit accusing Robinhood Markets Inc. of misleading investors about the online brokerage’s financials and growth prospects when conducting its 2021 initial public offering.

U.S. District Judge Edward Chen in San Francisco found no proof that disclosures in Robinhood’s IPO materials were false or misleading, or that declines in key metrics shortly before the company went public in July 2021 were historically extraordinary.

He said Robinhood’s warnings about future growth were “not particularly robust,” but were sufficient.

“Plaintiffs thus failed to plead that Robinhood did not disclose ‘material factors’ that would make an investment in Robinhood speculative or risky,” Chen wrote.

Shareholders in the proposed class action said Robinhood had concealed “severe deterioration” in the two months before the Menlo Park, California-based company’s IPO.

They said this included the number of people who actively used its platform, how much revenue they generated, assets under custody, and a 90 percent decline in cryptocurrency trading volume.

Shareholders said Robinhood’s stock price fell as much as 82 percent to $6.81 last June from the $38 IPO price as the company became, in the words of a JPMorgan analyst, “a growth company without the growth.”

Chen also dismissed claims against Robinhood Chief Executive Vladimir Tenev, other company officials, and the 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 doctor from Millburn, New Jersey. Chen gave them permission to file an amended complaint.

Lawyers for the plaintiffs did not immediately respond to requests for comment.

Cheryl Crumpton, a Robinhood lawyer, said the company remains committed to providing “complete and accurate information” to its investors, and is pleased the “meritless” lawsuit was dismissed.

Robinhood shares closed down 10 cents at $9.98 on Friday. Two days earlier, the company reported a loss for 2022 of $1.03 billion, or $1.17 per share, on net revenue 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.

By Jonathan Stempel

Note: You can use @chatbot mention tag to interact with ChatGPT language model in comments. Neither your comment, nor the generated responses will appear in "Comments" or "News & Views" streams.