Apex Clearing Corporation Suspension of Buys of AMC, GME, KOSS Class Action

On January 28, 2021, says the complaint for this class action, Apex Clearing Corporation suspended trading on stock for AMC Entertainment Holdings, Inc. (AMC), GameStop Corporation (GME), and Koss Corporation (KOSS), for nearly three and a half hours. The complaint alleges that this suspension was meant to affect the price of these stocks. The counts include negligence and breach of fiduciary duty, or, alternatively, breach of the implied covenant of good faith and fair dealing and tortious interference with a business relationship.

Apex provides broker-dealer services to direct customers as well as to customers brought to it by introducing broker-dealers.

According to the complaint, the suspension was “based on a possible future collateral requirement[] that Apex had not even bothered to confirm” and it was kept in place even after Apex found out that the actual figure was lower and “was, in fact, at a level that Apex believed warranted lifting the shutdown.”

But Apex shut down trading of the stocks in only one direction: investors could sell but not buy shares. The complaint alleges that this one-way suspension was “unprecedented.”

The complaint alleges that Apex did not “take reasonable steps to protect its customers and investors in times of market volatility” and that it knew its suspension would harm them. The one-way ban, the complaint alleges, caused the prices of the stocks to fall and to remain down even beyond the suspension period. The complaint alleges, “This reaction was foreseeable and was within the control of Apex.”

Those who already owned the stocks, the complaint says, had to sell at artificially suppressed prices or watch as the value of their holdings fell precipitously.”

Two class have been proposed for this action:

• The Nationwide Investor Class is all persons or entities in the US that (1) held shares or call options for shares of AMC, GME, or KOSS, as of the end of the day on January 27, 2021, (2) who sold the shares or call options or were forced to let the options expire as worthless between January 28, 2021 and February 23, 2021, and (3) who suffered damages.
• The Apex Broker-Dealer Class is (1) all Apex broker-dealer direct and shared customers who held shares or call options for shares of AMC, GME, or KOSS as of the end of the day on January 27, 2021, who sold the shares or call options or had to let the options expire as worthless, during the class period, and suffered damages; (2) all Apex broker-dealer direct and shared customers who placed a sale order on shares or on call options for shares of AMC, GME, or KOSS whose orders were delayed during the class period and who suffered damages; and (3) all Apex broker-dealer direct and shared customers who placed a buy order for shares or call options for shares of AMC, GME, or KOSS whose order was initially accepted by Apex or its introducing broker-dealers but then ultimately rejected by them during the class period, and who suffered damages.

Article Type: Lawsuit
Topic: Securities
Tags: Securities, Shutdown, Stock Losses, Tortious Interference with Business Relationship, Trading Orders