Retail investors taking on Citadel Securities LLC and brokerage and clearing defendants, including Robinhood Financial LLC, in what they describe as a hub-and-spoke conspiracy have urged the Southern District of Florida court overseeing the litigation not to dismiss their case. Tuesday’s opposition asserts that the complaint, one of several filed and recently amended, adequately pleads conspiracy to restrain trade in violation of Section 1 of the Sherman Act.
The amended complaint concerns the events leading up to late January 2021 when the defendants allegedly agreed to restrict retail investors from purchasing nine securities, undervalued stocks, whose prices began to skyrocket when investors began purchasing them in troves. The defendants reportedly acted in order to “artificially suppress share prices so that Citadel Securities could cover its short positions and mitigate its potential losses.”
The opposition argues that the plaintiffs have stated an antitrust case by showing the “who, what, where, and when’” of the defendants’ purported agreement. The operative complaint, the investors claim, explains how the financial services market is highly susceptible to collusion, how the defendants had the motive and opportunity to enter into the anticompetitive agreement, and how they monitored and enforced it.
Allegedly, this case is a rare one wherein the plaintiffs possess not only circumstantial evidence, but also direct evidence of the defendants’ conspiracy. The amended complaint identifies “numerous instances where Defendants openly communicated in furtherance of the conspiracy, including discussing the nature and scope of the scheme, coordinating and confirming the implementation of retail trading restrictions, instructing brokerages to further the scheme, efforts to conceal it, and continuing the scheme after January 28, 2021,” the plaintiffs say. The investors further note that they obtained this evidence without the full benefit of discovery and anticipate uncovering more inculpatory communications down the line.
The 49-page opposition also explains that the defendants have committed a per se violation of the Sherman Act because of their overt actions. They make this argument and one in the alternative alongside the contention that it is premature for the court to decide which level of scrutiny, the per se or the rule of reason test, applies to the case.