The grounds: the recent SEC report on January’s meme stock rally did not find collusion between its hedge fund arm, Citadel LLC, and Robinhood Markets, Inc.
The lawsuit alleges that Citadel pressured Robinhood to stop buy orders in meme stocks like GameStop Corp. and AMC Entertainment Holdings, Inc. Citadel had a substantial investment in Melvin Capital Management LP, which was losing billions shorting meme stocks.
Citadel’s demand for dismissal is absurd because the SEC report barely mentions the allegations in the Florida lawsuit. They are glossed over in a single paragraph, relying solely on testimony from the people involved (see footnote 92 above).
The SEC has decided to take Vlad Tenev (CEO of Robinhood), Gabriel Plotkin (CIO of Melvin), and Ken Griffin (CEO of Citadel) at their word. But any or all of those statements may be false.
What’s more, this lawsuit alleges that top executives of Robinhood and Citadel were in contact right before trades were limited.
That contact should be explored in detail. The court needs to review emails, internal chat messages, and phone records.
To take a whitewash of an SEC report and then use it to dismiss a lawsuit is ridiculous.
Let’s hope the court sees through it.
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