Adding antitrust claims expands the potential class, defined as anyone who lost money, said William Audet, of San Francisco's Audet & Partners. He filed a consumer class action on January 29, then brought an antitrust class action on February 2. "This case could be a lot bigger than the Robinhood angle," he said. "I'm kind of blown away at how big this could be."

Robinhood's customers number about 10 million, but the antitrust cases, with additional defendants, could increase the total class size to tens of millions of people.

"The class is astronomical," said Lana Nassar, of Chicago's Blaise & Nitschke, whose firm filed two antitrust class actions. "It's quite large, which is why there are so many lawsuits filed across the United States."

Nearly 50 class actions are pending against Robinhood and others in 11 states, including California, Texas, Florida, New Jersey, New York, Connecticut, and Pennsylvania.

Joeseph Saveri, with the Joseph Saveri Law Firm. (Photo: Jason Doiy/ALM)

On Friday, Joseph Saveri, of Joseph Saveri Law Firm in San Francisco, who filed an antitrust case on February 1, filed a motion before the U.S. Judicial Panel on Multidistrict Litigation to coordinate 42 class actions into multidistrict litigation in the Northern District of California, where Robinhood and several other defendants have headquarters. Suggesting a broadly named docket of In re GameStop et al, "Short Squeeze" Antitrust Litigation, Saveri listed at least 35 defendants and their subsidiaries facing lawsuits over the trading halt.

Although not all of the cases have antitrust claims, they involve the "same nucleus of facts, the same series of transactions, decisions, events over the same period of time," Saveri said.

The halt in trades, which involved shares of GameStop and American Airlines, has prompted concern about market manipulation and drawn the attention of Congress, with some lawmakers calling for a hearing. The U.S. Securities & Exchange Commission (SEC) also is reviewing the matter.

A Robinhood representative did not respond to a request for comment.

The lawsuits, however, aren't without serious hurdles. "It's a pretty tough case without more facts," said Tom C. W. Lin, a professor at Temple University's Beasley School of Law. That said, he added, "there's more to this story that hasn't been told yet."

Robinhood CEO Vlad Tenev has insisted that the online trading platform halted trades to raise $3 billion in capital to meet regulatory requirements. Its user agreement also has a provision that gives Robinhood the discretion to halt trades.

"A lot of their users aren't happy about it because, at the time, they wanted to buy more or sell some of their winning positions but couldn't do so," Lin said. "But it is in the language of the user agreement."

Most of the antitrust lawsuits bring claims under the federal Sherman Act. The suits allege that, rather than accept risky bets, the hedge funds and clearinghouses—faced with buying back shares at substantial sums—conspired to prohibit retail investors, like those on Reddit, from buying shares on the online trading platforms. The mass selloff that followed caused share prices to fall, preventing a free and open market while avoiding their own financial losses, the suits say.

Yet the antitrust claims are not certain, either. Lin said that plaintiffs have to allege that the defendants had a premeditated conspiracy to restrain stock trades. In reality, what might have happened was a bad business decision.

"This was very reactive, they didn't see this coming, and they responded in a way that's messy, to say the least, unwise, and whether that amounts to illegal is subject to legitimate debate," he said. "I don't think this was some preordained move by some hedge funds to hurt folks initially."

But Saveri's complaint cites halts in trades by 18 brokerages. He said the defendants "all changed their business practices, essentially simultaneously.

"When they all do the same thing at the same time, it seems to me it's evidence of something—not just random, unilateral activity," he said.

From: National Law Journal