The Supreme Court on Friday agreed to consider an effort by Robinhood to block a class-action lawsuit over the company's omission of interim financial data from the online broker's initial public offering in 2021.
Robinhood wants the Supreme Court to overturn a ruling by the 9th Circuit U.S. Court of Appeals that revived a lawsuit by investors against the company and firms involved with the IPO, including Goldman Sachs and J.P. Morgan Securities.
A San Francisco federal court judge had previously dismissed the lawsuit.
The Trump administration had urged the Supreme Court to hear Robinhood's appeal.
In its order granting Robinhood's request, the Supreme Court said it would focus solely on the question of whether a company that issues stock can be found liable under the misleading-omissions prong of Section 11(a) of the Securities Act of 1933 based on a determination that the issuer failed to disclose interim financial information that is material within the meaning of Section 11(a), without an additional inquiry to determine whether the omission rendered any affirmative statement misleading.
Robinhood's IPO came on the heels of a surge in investor interest during the Covid-19 pandemic of so-called meme stocks, and trading in the crypto asset Dogecoin.
In July 2021, Robinhood conducted its IPO, "for which it prepared a registration statement" that "contained only limited information about Robinhood's performance during the second quarter of 2021," the 9th Circuit panel that heard the case noted.
"After the initial public offering, Robinhood reported financial results from that second quarter, and its stock price dropped," the panel wrote.
The investors who sued Robinhood and the other defendants alleged that the registration statement omitted material information that was legally required to be disclosed.
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