Case 1:21-cv-21451-CMA Document 1 Entered on FLSD Docket 02/08/2021 Page 1 of 28
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`DAN DECHIRICO, ANGEL GUZMAN and
`JOSHUA PALMER,
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`Plaintiffs,
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`Civil Action No.: 1:21-cv-00677
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`CLASS ACTION COMPLAINT
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`JURY TRIAL DEMANDED
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`v.
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`ALLY FINANCIAL INC., ALPACA
`SECURITIES LLC, CASH APP INVESTING
`LLC, SQUARE INC., MORGAN STANLEY
`SMITH BARNEY LLC, E*TRADE
`SECURITIES LLC, E*TRADE FINANCIAL
`CORPORATION, E*TRADE FINANCIAL
`HOLDINGS, LLC, ETORO USA
`SECURITIES, INC., FREETRADE, LTD.,
`INTERACTIVE BROKERS LLC, M1
`FINANCE, LLC, OPEN TO THE PUBLIC
`INVESTING, INC., ROBINHOOD
`FINANCIAL, LLC, ROBINHOOD
`MARKETS, INC., ROBINHOOD
`SECURITIES, LLC, IG GROUP HOLDINGS
`PLC, TASTYWORKS, INC., TD
`AMERITRADE, INC., THE CHARLES
`SCHWAB CORPORATION, CHARLES
`SCHWAB & CO. INC., FF TRADE
`REPUBLIC GROWTH, LLC, TRADING 212
`LTD., TRADING 212 UK LTD., WEBULL
`FINANCIAL LLC, FUMI HOLDINGS, INC.,
`STASH FINANCIAL, INC., BARCLAYS
`BANK PLC, CITADEL ENTERPRISE
`AMERICAS, LLC, CITADEL SECURITIES
`LLC, MELVIN CAPITAL MANAGEMENT
`LP, SEQUOIA CAPITAL OPERATIONS LLC,
`APEX CLEARING CORPORATION, THE
`DEPOSITORY TRUST & CLEARING
`CORPORATION,
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`Defendants.
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`Case 1:21-cv-21451-CMA Document 1 Entered on FLSD Docket 02/08/2021 Page 2 of 28
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`Plaintiffs Dan Dechirico, Angel Guzman and Joshua Palmer (collectively, “Plaintiffs”), on
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`behalf of themselves and all others similarly situated, bring this Class Action Complaint against
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`Defendants, as defined below, for violations of Section 1 of the Sherman Act, 15 U.S.C. § 1,
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`Section 16 of the Clayton Act, 15 U.S.C. § 26, state antitrust and consumer protection laws, and
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`common law, and hereby allege as follows:
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`I.
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`NATURE OF THE ACTION
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`1.
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` This class action arises from a conspiracy to deprive individual investors,
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`commonly referred to as retail investors, of their ability to invest in the open market in the midst
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`of an unprecedent stock rise so that Defendants could shield themselves from incurring substantial
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`losses as a result of their own high-risk short selling strategies.
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`2.
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`In furtherance of this conspiracy, on or about January 28, 2021, the Brokerage
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`Defendants,1 willfully and intentionally restricted retail investors from purchasing the following
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`securities on their websites and/or mobile applications by disabling all buy features, thereby
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`manipulating the market: GameStop Corp. (GME), AMC Entertainment Holdings Inc. (AMC),
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`American Airlines Group Inc. (AAL), Bed Bath & Beyond Inc. (BBBY), BlackBerry Ltd. (BB),
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`Castor Maritime Inc. (CTRM), Express, Inc. (EXPR), Koss Corporation (KOSS), Naked Brand
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`Group Ltd. (NAKD), Nokia Corp. (NOK), Sundial Growers Inc. (SNDL), Tootsie Roll Industries,
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`Inc. (TR), or Trivago N.V. (TRVG) (collectively, hereinafter the “Relevant Securities”).
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`3.
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`By conspiring to restrict retail investors from purchasing the Relevant Securities,
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`Defendants created a one-way buy-sell situation thereby forcing retail investors to either hold or
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`sell their rapidly declining stocks.
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`1 “Brokerage Defendants” is defined infra, at Section III.B.
`2
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`4.
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`Notably, while the Brokerage Defendants placed restrictions on retail investors, no
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`such restriction were placed on institutional investors (i.e., the Fund Defendants).2 As a result, the
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`only entities which were permitted to purchase the Relevant Securities were institutional investors
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`(i.e., the Fund Defendants), many of whom were leveraged heavily “short”3 against the Relevant
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`Securities and had a vested interest in seeing the Relevant Securities’ prices depressed so that they
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`could cover their short sales at a lower cost.
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`5.
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`As a result of Defendants’ unlawful and anticompetitive scheme, numerous retail
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`investors (i.e., Plaintiffs and other Class members) suffered significant losses.
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`II.
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`JURISDICTION AND VENUE
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`6.
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`This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(d)(2)
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`because this is a class action in which the aggregate amount in controversy exceeds $5,000,000,
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`exclusive of interest and costs, and in which some members of the proposed class are citizens of a
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`state different from some defendants.
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`7.
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`This Court also has jurisdiction over this matter pursuant to 28 U.S.C. § 1331 in
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`that Plaintiff brings claims under Section 1 of the Sherman Act, 15 U.S.C. § 1 and Section 16 of
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`the Clayton Act, 15 U.S.C. § 26.
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`8.
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`This Court has supplemental jurisdiction over Plaintiffs’ pendent state law claims
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`pursuant to 28 U.S.C. § 1367.
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`9.
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`Pursuant to 28 U.S.C. § 1391, venue is proper in this Court because Defendants
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`transact business within this district, and/or have an agent and/or can be found in this district, and
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`2 “Fund Defendants” is defined infra, at Section III.C.
`3 Shorting, or short-selling, is when an investor borrows shares and immediately sells them, hoping
`he or she can purchase them later at a lower price, return them to the lender and profit from the
`difference.
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`3
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`the interstate trade and commerce, hereinafter described, is carried out, in substantial part, in this
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`district.
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`III.
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`PARTIES
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`A. Plaintiffs
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`10.
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`Plaintiff Dan Dechirico (“Dechirico”) is a resident of Richmond County in the State
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`of New York. Prior to January 28, 2021, Dechirico purchased and owned positions in AMC
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`Entertainment Holdings Inc., Bed Bath & Beyond Inc., BlackBerry Ltd. and Express, Inc. through
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`Robinhood.
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`11.
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`On January 28, 2021, Plaintiff Dechirico was unable to purchase the Relevant
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`Securities because Defendant Robinhood had deactivated the “buy” features on its applications
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`due to the anticompetitive scheme.
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`12.
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`Plaintiff Angel Guzman (“Guzman”) is a resident of New York County in the State
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`of New York. Prior to January 28, 2021, Guzman purchased and owned positions in GameStop
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`Corp., AMC Entertainment Holdings Inc., BlackBerry Ltd., Nokia Corp. and Express, Inc. through
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`Robinhood.
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`13.
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`On January 28, 2021, Plaintiff Guzman was unable to purchase the Relevant
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`Securities because Defendant Robinhood had deactivated the “buy” features on its applications
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`due to the anticompetitive scheme.
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`14.
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`Plaintiff Joshua Palmer (“Palmer”) is a resident of Nassau County in the State of
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`New York. Prior to January 28, 2021, Palmer purchased and owned positions in AMC
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`Entertainment Holdings Inc. and Nokia Corp. through Robinhood.
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`15.
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`On January 28, 2021, Plaintiff Palmer was unable to purchase the Relevant
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`Securities because Defendant Robinhood had deactivated the “buy” features on its applications
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`due to the anticompetitive scheme.
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`16.
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`On January 29, 2021, Plaintiff Palmer sold positions in AMC Entertainment
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`Holdings Inc. as a result of the anticompetitive scheme.
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`B. Brokerage Defendants
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`17.
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`Defendant Ally Financial Inc. (“Ally”) is a Delaware corporation, with its
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`headquarters located at Ally Detroit Center 500, Woodward Ave., Floor 10, Detroit, Michigan.
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`Ally provides financial services including an electronic trading platform to trade financial assets.
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`Ally sold and/or restricted the sale of Relevant Securities to members of the Class during the Class
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`Period.
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`18.
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`Defendant Alpaca Securities LLC (“Alpaca”) is a Delaware corporation, with its
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`headquarters at 20 N. San Mateo Drive Suite 10, San Mateo, California. Alpaca provides financial
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`services including an electronic trading platform to trade financial assets. Alpaca sold and/or
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`restricted the sale of Relevant Securities to members of the Class during the Class Period.
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`19.
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`Defendant Cash App Investing LLC (“Cash App Investing”) is a Delaware
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`corporation headquartered at 920, SW 6th Avenue Ste. 1200, Portland, Oregon. Cash App
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`Investing is a wholly owned subsidiary of Square Inc. Cash App Investing provides financial
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`services including an electronic trading platform to trade financial assets. Cash App Investing sold
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`and/or restricted the sale of Relevant Securities to members of the Class during the Class Period.
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`20.
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`Defendant Square Inc. is a Delaware corporation with its headquarters located at
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`1455 Market Street, Suite 600, San Francisco, California. Square Inc. and Cash App Investing
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`LLC are referred collectively as “Cash App.”
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`21.
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`Defendant Morgan Stanley Smith Barney LLC (“Morgan Stanley”) is a Delaware
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`limited-liability corporation and parent company of E*Trade, with its headquarters located at 1585
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`Broadway Avenue, New York, New York. Morgan Stanley is the owner and ultimate parent of
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`E*Trade Securities LLC, E*Trade Financial Corporation, and E*Trade Financial Holdings.
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`22.
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`Defendant E*Trade Securities LLC is a Delaware limited-liability corporation, with
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`its headquarters at 671 North Glebe Road, Ballston Tower, Arlington, Texas.
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`23.
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`Defendant E*Trade Financial Corporation is a Delaware corporation, with its
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`headquarters at 671 North Glebe Road, Ballston Tower, Arlington, Texas.
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`24.
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`Defendant E*Trade Financial Holdings, LLC is a Delaware limited-liability
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`corporation, with its headquarters at 671 North Glebe Road, Ballston Tower, Arlington, Texas.
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`Morgan Stanley, E*Trade Securities LLC, E*Trade Financial Corporation, and E*Trade Financial
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`Holdings are collectively referred to as “E*Trade.”
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`25.
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`Defendant Etoro USA Securities, Inc. (“eToro”) is a Delaware corporation and
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`owner of the application eToro, headquartered at 221 River St., 9th floor, Hoboken, New Jersey.
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`eToro provides financial services including an electronic trading platform to trade financial assets.
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`eToro sold and/or restricted the sale of Relevant Securities to members of the Class during the
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`Class Period.
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`26.
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`Defendant Freetrade, Ltd. (“Freetrade”) is a company incorporated in the United
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`Kingdom, headquartered at 32-38 Leman Street, London, United Kingdom. Freetrade provides
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`financial services including an electronic trading platform to trade financial assets. Freetrade sold
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`and/or restricted the sale of Relevant Securities to members of the Class during the Class Period.
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`27.
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`Defendant Interactive Brokers LLC (“Interactive Brokers”) is a Delaware limited
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`liability corporation headquartered at 1 Pickwick Plaza, Greenwich, Connecticut. Interactive
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`Brokers provides financial services including an electronic trading platform to trade financial
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`assets. Interactive Brokers sold and/or restricted the sale of Relevant Securities to members of the
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`Class during the Class Period.
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`28.
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`Defendant M1 Finance, LLC (“M1 Finance”) is a Delaware corporation
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`headquartered at 200 North La Salle Street, Suite 800, Chicago, Illinois. M1 Finance provides
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`financial services including an electronic trading platform to trade financial assets. M1 Finance
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`sold and/or restricted the sale of Relevant Securities to members of the Class during the Class
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`Period.
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`29.
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`Defendant Open To The Public Investing, Inc. (“Public.com”) is a New York
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`corporation, headquartered at 1 State Street Plaza, 10th Floor, New York, New York. Public.com
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`provides financial services including an electronic trading platform to trade financial assets.
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`Public.com sold and/or restricted the sale of Relevant Securities to members of the Class during
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`the Class Period.
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`30.
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`Defendant Robinhood Markets, Inc. is a Delaware corporation with its principal
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`place of business at 85 Willow Road, Menlo Park, California. Defendant Robinhood Markets, Inc.
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`is the corporate parent of and controls the affairs of Defendants Robinhood Financial, LLC and
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`Robinhood Securities, LLC.
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`31.
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`Defendant Robinhood Financial, LLC is a Delaware corporation with its principal
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`place of business at 85 Willow Road, Menlo Park, California. It is a wholly- owned subsidiary of
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`Robinhood Markets, Inc. Robinhood Financial is registered as a broker-dealer with the U.S.
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`Securities & Exchange Commission (“SEC”). Defendant Robinhood Financial acts as an
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`introducing broker and has a clearing arrangement with its affiliate Defendant Robinhood
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`Securities.
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`32.
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`Defendant Robinhood Securities, LLC is a Delaware corporation with its principal
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`place of business at 500 Colonial Center Parkway, Suite 100, Lake Mary, Florida. It is a wholly
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`owned subsidiary of Defendant Robinhood Markets, Inc. Defendant Robinhood Financial
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`(collectively, with Robinhood Financial, LLC and Robinhood Markets, Inc. “Robinhood”).
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`33.
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`Robinhood provides financial services including an electronic trading platform to
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`trade financial assets. Robinhood sold and/or restricted the sale of Relevant Securities to members
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`of the Class during the Class Period.
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`34.
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`Defendant Barclays Bank PLC is a company incorporated in the United Kingdom,
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`and headquartered at 745 7th Ave New York, New York. Barclays Bank PLC is the ultimate
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`corporate parent of, and controls the affairs of Stash Financial, Inc.
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`35.
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`Defendant Stash Financial, Inc. (“Stash”) is a Delaware corporation and owner of
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`the application Stash, headquartered at 500 7th Avenue,18th Floor, New York, New York. Stash
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`is a wholly-owned subsidiary of Barclays Bank PLC. Stash provides financial services including
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`an electronic trading platform to trade financial assets. Stash and/or restricted the sale of Relevant
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`Securities to members of the Class during the Class Period.
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`36.
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`Defendant IG Group Holdings PLC is a Delaware public limited company and
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`ultimate corporate parent of and controls the affairs Tastyworks, Inc., headquartered at 200 West
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`Jackson Blvd., Suite 1450, Chicago, Illinois.
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`37.
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`Defendant Tastyworks, Inc. is a Delaware corporation and wholly-owned
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`subsidiary of IG Group Holdings PLC, headquartered at 100 West Fulton Market Street, Suite 220,
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`Chicago, Illinois (IG Holdings and Tastyworks, Inc. collectively, “Tastyworks”).
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`8
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`38.
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`Tastyworks provides financial services including an electronic trading platform to
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`trade financial assets. Tastyworks sold and/or restricted the sale of Relevant Securities to members
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`of the Class during the Class Period.
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`39.
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`Defendant The Charles Schwab Corporation is a Delaware corporation with its
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`principal place of business at 211 Main Street, San Francisco, California. The Charles Schwab
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`Corporation is the ultimate corporate parent of and controls the affairs of Charles Schwab & Co.,
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`Inc. and TD Ameritrade Inc.
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`40.
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`Defendant Charles Schwab & Co. Inc. is a California corporation with its principal
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`place of business at 211 Main Street, San Francisco, California. Charles Schwab & Co. Inc. is a
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`wholly owned subsidiary of The Charles Schwab Corporation.
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`41.
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`Defendant TD Ameritrade, Inc. is a New York corporation with its principal place
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`of business in Illinois. As of October 2020, The Charles Schwab Corporation acquired TD
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`Ameritrade, Inc. The Charles Schwab Corporation, Charles Schwab & Co., Inc. and TD
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`Ameritrade, Inc. collectively, “TD Ameritrade.” TD Ameritrade provides financial services
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`including an electronic trading platform to trade financial assets. TD Ameritrade sold and/or
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`restricted the sale of Relevant Securities to members of the Class during the Class Period.
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`42.
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`Defendant FF Trade Republic Growth, LLC (“Trade Republic”) is a Delaware
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`corporation, headquartered at One Letterman Drive, Building D, 5th Floor, San Francisco,
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`California. Trade Republic provides financial services including an electronic trading platform to
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`trade financial assets. Trade Republic sold and/or restricted the sale of Relevant Securities to
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`members of the Class during the Class Period.
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`43.
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`Defendant Trading 212 Ltd. is a Bulgarian company headquartered at 3 Lachezar
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`Stanchev Str., Litex Tower, Floor 10, Sofia 1797, Bulgaria. Trading 212 Ltd. is the ultimate
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`corporate parent of and controls the affairs of Trading 212 UK Ltd. 56.
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`44.
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`Defendant Trading 212 UK Ltd. is a company incorporated in the United Kingdom
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`headquartered at 107 Cheapside, London, United Kingdom. Trading 212 UK Ltd. a wholly-owned
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`subsidiary of Trading 212 Ltd. (Trading 212 Ltd. and Trading 212 UK Ltd. collectively, “Trading
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`212”). Trading 212 provides financial services including an electronic trading platform to trade
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`financial assets. Trading 212 sold and/or restricted the sale of Relevant Securities to members of
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`the Class during the Class Period.
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`45.
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`Defendant Fumi Holdings, Inc. is a Chinese corporation. Fumi Holdings, Inc. and
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`headquartered in Hunan, China. Fumi Holdings, Inc. is the corporate parent of, and controls the
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`affairs of Webull Financial LLC.
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`46.
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`Defendant Webull Financial LLC (“WeBull”) is a Delaware corporation and
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`wholly-owned subsidiary of Fumi Holdings, Inc., headquartered at 44 Wall Street, Ste 501, New
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`York, New York. WeBull is a wholly-owned subsidiary of Fumi Holdings, Inc. WeBull provides
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`financial services including an electronic trading platform to trade financial assets. WeBull sold
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`and/or restricted the sale of Relevant Securities to members of the Class during the Class Period.
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`C. Fund Defendants
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`47.
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`Defendant Citadel Enterprise Americas LLC is a Delaware limited-liability
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`corporation, headquartered at 131 South Dearborn Street, Chicago, Illinois. Citadel Enterprise
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`Americas LLC is the corporate parent of, and controls the affairs of Citadel Securities LLC.
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`48.
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`Defendant Citadel Securities LLC is a Delaware limited-limited corporation,
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`headquartered at 131 South Dearborn Street, Chicago, Illinois. Citadel Securities LLC is a wholly-
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`owned subsidiary of Citadel Enterprise Americas LLC. Citadel Enterprise Americas, LLC and
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`Citadel Securities LLC collectively, “Citadel.” Defendant Citadel took short positions in the
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`Relevant Securities. Citadel actively participated in the conspiracy and the wrongful acts alleged
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`herein.
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`49.
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`Defendant Melvin Capital Management LP (“Melvin Capital”) is a Delaware
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`limited partnership headquartered at 535 Madison Avenue, 22nd Floor, New York, New York.
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`Defendant Melvin Capital took short positions in the Relevant Securities. Melvin Capital actively
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`participated in the conspiracy and the wrongful acts alleged herein.
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`50.
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`Defendant Sequoia Capital Operations LLC (“Sequoia”) is a Delaware limited-
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`liability corporation, headquartered at 2800 Sand Hill Road, Suite 101, Menlo Park, California.
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`Defendant Sequoia actively participated in the conspiracy and the wrongful acts alleged herein.
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`D. Clearinghouse Defendants
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`51.
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`Defendant Apex Clearing Corporation (“Apex”) is a New York corporation
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`headquartered at One Dallas Center, 350 N. St. Paul, Suite 1300, Dallas, Texas. Defendant Apex
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`participated in the conspiracy and the wrongful acts alleged herein.
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`52.
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`Defendant The Depository Trust & Clearing Corporation (“DTCC”) is a New York
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`company headquartered at 55 Water Street, New York, New York. Defendant DTCC participated
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`in the conspiracy and the wrongful acts alleged herein.
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`53.
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`All of Defendants’ anticompetitive and wrongful actions described in this
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`complaint are part of, and in furtherance of, the illegal restraint of trade alleged herein, and were
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`authorized, ordered, and/or undertaken by Defendants’ various officers, agents, employees, or
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`other representatives while actively engaged in the management of Defendants’ affairs (or that of
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`their predecessors-in-interest) within the course and scope of their duties and employment, and/or
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`with the actual, apparent, and/or ostensible authority of Defendants.
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`IV.
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`FACTUAL ALLEGATIONS
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`54.
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`Retail investors, like Plaintiffs and the other members of the Class, are non-
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`professional market participants who generally invest smaller amounts and trade through
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`traditional or online brokerage firms, such as the Brokerage Defendants, or other types of
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`investment accounts through websites, apps and/or other trading platforms. They do not manage
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`money on someone else’s behalf, rather, they manage their own money.
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`55.
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`Due to their smaller trades, retail investors may pay higher fees and commissions,
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`although some online brokers, such as Defendant Robinhood, offer no-fee trading4 and have even
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`enticed individual investors with slogans such as “[l]et the people trade,” implying that the stock
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`market should be open and available to all participants regardless of size or sophistication.
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`56.
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`Contrary to retail investors, institutional investors, such as the Fund Defendants,
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`are companies or organizations that invests money on behalf of other people. Generally, there are
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`six types of institutional investors: endowment funds, commercial banks, mutual funds, hedge
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`funds, pension funds, and insurance companies. Due to their size and resources, institutional
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`investors are considered savvier than the average retail investor and are often subject to less
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`regulatory oversight. Simply stated, retail investors are the David and institutional investors are
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`the Goliath.
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`57.
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`On or around January 11, 2021, stocks prices in the Relevant Securities, such as
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`GameStop (GME) began to rise, due in large part to retail investors exchanging information
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`4 Defendant Robinhood does not charge their investors a fee per transaction, but instead earns
`revenue through rebates, kickbacks and other payments from market makers like the
`Clearinghouse Defendants.
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`regarding investments on social networking sites, such as Reddit, and their purchases of “long”5
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`positions in the Relevant Securities companies, including stocks, option contracts and other
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`securities.
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`58.
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`Believing that some of the Relevant Securities were undervalued, retail investors,
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`including Plaintiffs and the members of the Class, continued to purchase the Relevant Securities,
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`thereby skyrocketing the per share price of some of the Relevant Securities, such as GME.
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`59. Meanwhile, the institutional investors, including the Fund Defendants, acquired
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`massive “short”6 positions in the Relevant Securities. In so doing, the Fund Defendants made
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`highly speculative bets. When the Relevant Securities increased in value, due in large part to retail
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`investors purchasing the Relevant Securities and increasing stock prices, the Fund Defendants,
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`Clearinghouse Defendants and unnamed co-conspirators were exposed to potential losses of
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`several billion dollars.
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`60.
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`To the Fund Defendants’ dismay, retail investors continued to purchase long
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`positions in the Relevant Securities, and as a result, the stock prices of these companies continued
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`to rise resulting in what is referred to as a “short squeeze.”
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`61.
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`A short squeeze occurs when a stock or other asset rises sharply in value, distressing
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`short positions in the asset. A short squeeze therefore is when investors in short positions are faced
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`with a rapid increase in the shorted asset’s value, exposing the short seller to increased loss. As
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`the price of the asset rises, short sellers may face pressure to buy back stock to exit their short
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`5 Having a “long” position in a security means that the investor owns the security. Investors
`maintain “long” security positions in the expectation that the stock will rise in value in the future.
`The opposite of a “long” position is a “short” position.
`6 As set forth above, a “short” position is generally the sale of a stock the investor does not own.
`“Short” sellers borrow shares of an asset they believe will fall in price only to buy them after the
`asset depreciates in value.
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`positions to mitigate their losses. In the absence of intervention, as short sellers exit their short
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`positions to buy back stocks to cover their shorts, the purchase of stock further increases the price
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`of the stock.
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`62.
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`In order to stop the bleed, institutional investors holding large short positions in the
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`Relevant Securities attempted to convince the retail investors that the Relevant Securities were not
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`as valuable as perceived. However, their efforts failed as retailer investors continued to buy long
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`positions in the Relevant Securities thereby further exposing the short sellers, such as the Fund
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`Defendants, to substantial losses.
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`63.
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`To prevent further loss, Defendants then orchestrated an anticompetitive scheme to
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`limit trading in the Relevant Securities.
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`64.
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`Upon information and belief, after the market closed on January 27, 2021, after-
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`hour traders7 continued to take more short positions in one of the Relevant Securities, GME,
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`thereby insinuating a GME sell off. Nonetheless, chatter in the retail investor forums, such as
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`Reddit, indicated that the retail investors would continue purchasing the Relevant Securities.
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`65.
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`However, on January 28, 2021, Plaintiffs and the members of the Class woke up to
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`learn that the Brokerage Defendants, such as Defendant Robinhood, had suddenly and without
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`prior notice8 restricted their ability to buy long positions in the Relevant Securities by disabling
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`all buy features on their respective websites and/or mobile applications.9
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`7 Notably, after-hours trading is not permitted for retail investors and is restricted to institutional
`investors such as the Fund Defendants.
`8 Defendant Robinhood circulated an email to its customers at 1:00am EST on January 29, 2021,
`the same day it restricted trading, stating that “[e]ffective immediately, all GME and AMC options
`with expirations of January 29th, 2021 will be set to closing transactions only.” Defendant
`Robinhood’s website later revealed restrictions on all of the Relevant Securities.
`9 Various reports indicated that the SEC was monitoring the rapidly increasing price of the
`Relevant Securities, but there was no governmental guidance or mandate restricting trading in the
`Relevant Securities prior to the January 28, 2021 shutdown.
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`Case 1:21-cv-21451-CMA Document 1 Entered on FLSD Docket 02/08/2021 Page 15 of 28
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`66.
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`Upon information and belief, some retail investors had their queued purchase orders
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`cancelled without their consent, while other were unable to search for the Relevant Securities on
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`certain of the Brokerage Defendants’ platforms. Upon further information and belief, the
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`Brokerage Defendants implemented similar, if not identical restrictions.
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`67.
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`Defendants’ anticompetitive scheme to restrict retail investors from purchasing the
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`Relevant Securities created a one-way buy-sell situation thereby forcing retail investors to either
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`hold or sell their rapidly declining stocks leading to a massive sell-off and resulting in an even
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`steeper decline in the prices of the Relevant Securities.
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`68.
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`As mentioned supra, the Brokerage Defendants’ restriction on purchasing did not
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`extend to the Fund Defendants. Thus, the Fund Defendants were able to cover their short positions
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`by buying securities at the artificially reduced price.
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`69.
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`Indeed, not all brokerages joined in the conspiracy, however, the Clearinghouse
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`Defendants raised the fees and/or removed the ability to fill purchases of the Relevant Securities
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`to brokerages that did not comply with the anticompetitive conduct.10 By so doing, the
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`Clearinghouse Defendants further facilitated the Fund Defendants covering their short positions in
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`furtherance of the conspiracy.
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`70.
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`As further evidence of Defendants’ anticompetitive scheme, an employee of
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`Defendant Robinhood reported in online forum that Robinhood’s founder and other c-level
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`executives had received calls from Defendant Sequoia Capital pressuring Defendant Robinhood
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`into restricting trading on one or more of the Relevant Securities.
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`10 Brokerages route trades through clearinghouses which streamlines the trading process. Some
`brokerages, such as Defendant Robinhood, serve as their own clearinghouse. By increasing fees
`to purchase a particular stock, the clearinghouse can suppress the number of purchases of that stock
`and affect the stock’s price.
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`71.
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`Defendants’ anticompetitive scheme soon drew the ire of journalists, lawmakers
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`and the SEC, who issued a formal statement that it was investigating the situation on January 29,
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`2021.
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`72.
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`Despite the backlash, Defendants continued their anticompetitive behavior after
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`January 28, 2021. Although the broad-based restrictions on the purchase of long positions in the
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`Relevant Securities have all but been lifted, purchases have been heavily restricted and the number
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`of shares of certain of the Relevant Securities have continued to be limited.
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`73.
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`Rather ironically, on February 2, 2021, Defendant Robinhood circulated an email
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`to its customers asserting that “[w]e have always sought to put our customers first and we want
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`you to be able to invest on your own terms.” The email further stated that “[w]e didn’t want to
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`stop people from buying stocks and we certainly weren’t trying to help hedge funds.”
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`74.
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`The aforementioned email also contained an embedded link to a “letter to our
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`customers,” regurgitating similar verbiage. While Robinhood’s campaign of championing
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`individual investors may have worked in the past, the Company’s recent assertion that “[we]
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`believe the financial system should be built to work for everyone” seems rather disingenuous in
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`light of Defendant Robinhood’s actions just days prior.
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`V.
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`CLASS ACTION ALLEGATIONS
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`75.
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`Plaintiffs bring this action for damages and injunctive relief on behalf of themselves
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`and all others similarly situated as a class action pursuant to Rules 23(a), (b)(2) and (b)(3) of the
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`Federal Rules of Civil Procedure, on behalf of the following Classes:
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`a. All persons or entities in the United States that directly purchased securities
`in GameStop Corp. (GME), AMC Entertainment Holdings Inc. (AMC),
`American Airlines Group Inc. (AAL), Bed Bath & Beyond Inc. (BBBY),
`BlackBerry Ltd. (BB), Castor Maritime Inc. (CTRM), Express, Inc.
`(EXPR), Koss Corporation (KOSS), Naked Brand Group Ltd. (NAKD),
`Nokia Corp. (NOK), Sundial Growers Inc. (SNDL), Tootsie Roll Industries,
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`Inc. (TR), or Trivago N.V. (TRVG) from one or more of the Defendants
`between January 1, 2021 through and until the anticompetitive effects of
`Defendants’ unlawful conduct cease (the “Class Period”).
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`b. All persons or entities in the United States that placed an order, after the
`close of the market on January 27, 2021, to purchase securities in
`GameStop Corp. (GME), AMC Entertainment Holdings Inc. (AMC),
`American Airlines Group Inc. (AAL), Bed Bath & Beyond Inc. (BBBY),
`BlackBerry Ltd. (BB), Castor Maritime Inc. (CTRM), Express, Inc.
`(EXPR), Koss Corporation (KOSS), Naked Brand Group Ltd. (NAKD),
`Nokia Corp. (NOK), Sundial Growers Inc. (SNDL), Tootsie Roll Industries,
`Inc. (TR), or Trivago N.V. (TRVG) from one or more of the Defendants but
`that order was cancelled or otherwise not filled due to the anticompetitive
`effects of Defendants’ unlawful conduct.
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`76.
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`Expressly excluded from the Classes are Defendants and any of their respective
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`members, affiliates, parents, subsidiaries, officers, directors, employees, suc