© Reuters. FILE PHOTO: The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company’s IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly/
(Reuters) – A U.S. judge on Friday dismissed a lawsuit accusing Robinhood Markets Inc (NASDAQ:) of misleading investors when conducting its 2021 initial public offering about the brokerage’s financials and growth prospects.
Shareholders in the proposed class action said that just before going public in July 2021, Robinhood concealed “severe deterioration” in key metrics, including the number of people who actively used its platform, how much revenue they generated, cryptocurrency trading volume, and assets under custody.
They said Robinhood’s stock price fell as much as 82% to $6.81 from the $38 IPO price as reality set in.
U.S. District Judge Edward Chen in San Francisco, however, said the investors failed to show that Robinhood’s disclosures in IPO registration materials and prospectus were false or misleading or that the declines were historically extraordinary.
He also said the paperwork contained warnings about future growth, and that while the warnings were “not particularly robust” they offset a claim that Robinhood should have disclosed more.
Lawyers for the investors did not immediately respond to requests for comment. Robinhood and its lawyers did not immediately respond to similar requests.
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