Robinhood Triumphs Over Angry Investors

Robinhood Markets prevailed over investors who claim the California financial services platform unlawfully stopped them from buying “meme” stocks.

In a 3-0 decision Thursday, the 11th U.S. Circuit Court of Appeals in Atlanta struck down an appeal filed by 16 investors claiming the company's restrictions or purchases of 13 so-called meme stocks cost them money.

The company barred the transactions after the trading platform was famously overrun by frenzied investors clamoring to buy shares of companies like GameStop and AMC Theaters, exposing Robinhood to new regulatory compliance risks. 

U.S. Circuit Court Judge Britt Grant affirmed that Robinhood has the right to restrict trading on its platform and to deny investors’ transactions. She dismissed claims that the company was negligent in stopping investors from incurring losses.

“Robinhood had no tort duty to avoid causing purely economic loss,” the judge wrote.

Thursday’s decision affirms the case's dismissal by a federal court in Miami in 2021. Robinhood has been the subject of numerous lawsuits nationwide due to its trading restrictions during the meme stock surge.

“When Robinhood restricted its customers’ ability to buy meme stocks, it took a sizable—and perhaps justifiable—hit in the court of public opinion,” Grant wrote. “But in this Court, Robinhood is only accountable for specific legal duties.”