(Adds Robinhood statement, closing stock price)
By Jonathan Stempel
Feb 10 (Reuters) - A U.S. judge on Friday dismissed a
lawsuit accusing Robinhood Markets Inc of misleading
investors about the online brokerage's financials and growth
prospects when conducting its 2021 initial public offering.
U.S. District Judge Edward Chen in San Francisco found no
proof that disclosures in Robinhood's IPO materials were false
or misleading, or that declines in key metrics shortly before
the company went public in July 2021 were historically
extraordinary.
He said Robinhood's warnings about future growth were "not
particularly robust," but were sufficient.
"Plaintiffs thus failed to plead that Robinhood did not
disclose 'material factors' that would make an investment in
Robinhood speculative or risky," Chen wrote.
Shareholders in the proposed class action said Robinhood had
concealed "severe deterioration" in the two months before the
Menlo Park, California-based company's IPO.
They said this included the number of people who actively
used its platform, how much revenue they generated, assets under
custody, and a 90% decline in cryptocurrency trading volume.
Shareholders said Robinhood's stock price fell as much as
82% to $6.81 last June from the $38 IPO price as the company
became, in the words of a JPMorgan analyst, "a growth company
without the growth."
Chen also dismissed claims against Robinhood Chief Executive
Vladimir Tenev, other company officials, and the IPO
underwriters led by Goldman Sachs and JPMorgan.
The plaintiffs were led by Vinod Sodha, a psychiatrist from
Beverly Hills, California, and his daughter Amee Sodha, a doctor
from Millburn, New Jersey. Chen gave them permission to file an
amended complaint.
Lawyers for the plaintiffs did not immediately respond to
requests for comment.
Cheryl Crumpton, a Robinhood lawyer, said the company
remains committed to providing "complete and accurate
information" to its investors, and is pleased the "meritless"
lawsuit was dismissed.
Robinhood shares closed down 10 cents at $9.98 on
Friday. Two days earlier, the company reported a loss for 2022
of $1.03 billion, or $1.17 per share, on net revenue of $1.36
billion.
The case is Sodha et al v Robinhood Markets Inc et al, U.S.
District Court, Northern District of California, No. 21-09767.
(Reporting by Jonathan Stempel in New York; Editing by Leslie
Adler and Rosalba O'Brien)
Messaging: jon.stempel.thomsonreuters.com@reuters.net))
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