Robinhood and Citadel Respond to Antitrust Complaint

Robinhood and Citadel have responded to the market conspiracy charges, almost a month after traders harmed by the January 2021 short squeeze relaunched their antitrust action against them.

Fazzaco Live Webinar on 22nd Feb.: Viktoria Soltesz Discusses How to Maximise the Crypto Wave​

On February 18, the defendants filed a memorandum of law in support of their Motion to Dismiss the Amended Consolidated Class Action filed in the Antitrust Tranche (6).

This case involves a collusive arrangement, according to the plaintiffs, to prevent individual investors from exercising control over their trades and trading accounts. Robinhood and Citadel are accused of devising an anticompetitive strategy to limit Retail Investors' access to specific assets in the stock market, lower their prices, and prevent the market from functioning freely and fairly.

According to the accusation, Robinhood and Citadel engaged into an illegal arrangement to carry out the scheme and undertook a series of overt acts in support of it. The settlement agreement was implemented, successfully, and achieved its goals, resulting in hundreds of millions of dollars in damages for the Plaintiffs and the Class they represent.

Now, Robinhood and Citadel seek to dismiss the amended complaint. The companies note that the plaintiffs first claimed that 35 defendants—including clearinghouses, market makers, institutional investors, clearing brokers and introducing brokers—executed a "large, overarching conspiracy to prevent the market from operating freely." Plaintiffs then retreated to a slightly narrower claim of a horizontal conspiracy among various clearing and introducing brokers with alleged vertical agreements between at least some of those defendants and a single market-maker (Citadel Securities).

The plaintiffs have since dropped all claims of a horizontal agreement and restricted their ever-shrinking conspiracy to just two entities: Robinhood and Citadel Securities.

As reflected in the recent SEC Staff Report on Equity and Options Market Structure Conditions in Early 2021, and a recently announced proposed rule regarding accelerating the securities transaction settlement period, the SEC is actively regulating the conditions that led to the market volatility that characterized the January 2021 short squeeze. Plaintiffs' Amended Antitrust Complaint threatens to introduce concurrent securities and antitrust regulation of the same conduct, with significant conflicts certain to follow, the defendants say.

The SEC is actively regulating the conditions that led to the market volatility that characterized the January 2021 short squeeze, as evidenced by a recent SEC Staff Report on Equity and Options Market Structure Conditions in Early 2021 and a recently announced proposed rule regarding accelerating the securities transaction settlement period. The defendants claim that the plaintiffs' Amended Antitrust Complaint threatens to establish concurrent securities and antitrust regulation of the same activity, resulting in major conflicts.

"After a year of reviewing tens of thousands of pages of documents produced by defendants, amending their complaints and shifting their theories, Plaintiffs still cannot state a viable claim for one simple reason: there was no conspiracy, and no violation of the antitrust laws. This Court should dismiss the Amended Antitrust Complaint with prejudice," stated Robinhood and Citadel at the end of the memorandum.