fbpx

GameStop Short Sellers Conspiracy to Stop Retail Buyers Antitrust Class Action

What was all that about GameStop trades? This antitrust class action centers on that story, bringing suit on behalf of small retail investors against a long list of defendants—brokerages, funds, and clearinghouses—with familiar names, such as Morgan Stanley Smith Barney, E*Trade, Robinhood, TD Ameritrade, and Charles Schwab. The complaint alleges that individual investors “were stripped of the rights to control their investments due to a large, overarching conspiracy to prevent the market from operating freely and to stop Defendants from hemorrhaging losses as a result of their highly speculative short selling strategies.”

Retail investors are non-professionals who trade on their own behalf. They execute their trades through websites, apps, or platforms provided by brokerages.

A number of large hedge funds and investment companies made short sales in a group of stocks the complaint calls the Relevant Securities. These included GameStop, American Airlines, and AMC Theaters, among others. Short sales are a risky investment strategy in which investors borrow and sell a stock, betting that the price will go down before they have to replace and return it. Short sales are highly speculative investments, because if the stock’s price rises instead, short sellers cannot limit the amount they may lose.

A number of retail investors then decided to buy the Relevant Securities. News reports have claimed that some were motivated, for example, by affection for GameStop and the other companies and an unwillingness to allow their values to fall too far. The complaint claims only that the retail investors believed the Relevant Securities were good investments. Their purchases drove the price of the stocks upwards, putting the short sellers in a bad position.

The complaint alleges that the defendants then “conspired to prevent the Retail Investors from buying any further stock and forcing Retail Investors to sell their Relevant Securities to artificially suppress” prices.

How did they do this? According to the complaint, they “disabled all buy features on their platforms and thereby left the Retail Investors with no choice but to sell or hold their rapidly dwindling stocks. … Other Brokerage Defendants displayed loading graphics on the landing pages for these Relevant Securities to prevent users from purchasing any more Relevant Securities,” which thus blocked retail demand and lowered prices.

The Retail Investors claim that they were induced to sell their shares at lower prices than they would have otherwise, and prevented them from buying more shares, which might have raised the prices again.

The class for this action is all persons or entities in the US that directly bought securities in GameStop Corp., AMC Entertainment Holdings, Inc. American Airlines Group, Inc., Bed Bath & Beyond, Blackberry Ltd., Express, Inc., Koss Corporation, Naked Brand Group Ltd., Nokia Corp., Sundial Growers, Inc., Tootsie Roll Industries, Inc., or Trivago NV, between January 1, 2021 until the anticompetitive effects of the unlawful conduct stops.

Article Type: Lawsuit
Topic: Antitrust, News

Most Recent Case Event

GameStop Short Sellers Conspiracy to Stop Retail Buyers Antitrust Complaint

February 1, 2021

What was all that about GameStop trades? This antitrust class action centers on that story, bringing suit on behalf of small retail investors against a long list of defendants—brokerages, funds, and clearinghouses—with familiar names, such as Morgan Stanley Smith Barney, E*Trade, Robinhood, TD Ameritrade, and Charles Schwab. The complaint alleges that individual investors “were stripped of the rights to control their investments due to a large, overarching conspiracy to prevent the market from operating freely and to stop Defendants from hemorrhaging losses as a result of their highly speculative short selling strategies.”

GameStop Short Sellers Conspiracy to Stop Retail Buyers Antitrust Complaint

Case Event History

GameStop Short Sellers Conspiracy to Stop Retail Buyers Antitrust Complaint

February 1, 2021

What was all that about GameStop trades? This antitrust class action centers on that story, bringing suit on behalf of small retail investors against a long list of defendants—brokerages, funds, and clearinghouses—with familiar names, such as Morgan Stanley Smith Barney, E*Trade, Robinhood, TD Ameritrade, and Charles Schwab. The complaint alleges that individual investors “were stripped of the rights to control their investments due to a large, overarching conspiracy to prevent the market from operating freely and to stop Defendants from hemorrhaging losses as a result of their highly speculative short selling strategies.”

GameStop Short Sellers Conspiracy to Stop Retail Buyers Antitrust Complaint
Tags: Antitrust, Collusion and Price Fixing, Securities