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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% decline in cryptocurrency trading volume.
Shareholders said Robinhood's stock price fell as much as 82% 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.
(Reporting by Jonathan Stempel in New York; Editing by Leslie
Adler and Rosalba O'Brien)
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