The U.S. Supreme Court gave notice on Nov. 13 that it will consider online trading company Robinhood Markets’ effort to end a lawsuit that alleged it misled investors about the state of its financials ahead of an initial public offering (IPO).
Robinhood had experienced record-high financial growth in the first quarter of 2021, and its IPO took place in July that same year. Ahead of the IPO, the company said trading activity was returning to levels more in line with prior investment periods.
Many of Robinhood’s trades were, at that time, coming from surges in “meme” stock trading, such as GameStop and Dogecoin. When those trades fell off, so did Robinhood’s business.
Investors who sued said Robinhood was obligated to publish that information before the IPO, even though the company’s disclosure statements were not due until August that year. They accuse the company of misleading through omission.
In its filing to the Supreme Court, Robinhood argued that “an issuer is not required to disclose any and all information a potential investor might want to know,” as long as it does not make any misleading statements.
The class-action brought against Robinhood is headed by father-daughter investors Vinod and Amee Sodha. They allege Robinhood disclosed parts of its second-quarter data that gave the “impression of continued explosive growth, while simultaneously withholding” other data that “showed a dramatic reversal.”
In its filing to the Supreme Court, Robinhood argued that “an issuer is not required to disclose any and all information a potential investor might want to know,” as long as it does not make any misleading statements.
It also said it had “expressly cautioned that its recent performance was not an indicator of future results and warned of upcoming declines.”
U.S. District Judge Edward Chen in San Francisco dismissed the investors’ lawsuit in 2024, finding that Section 11(a) of the Securities Act of 1933 required Robinhood to have omitted relevant information in a way that made some of its previous statements misleading before they could sue.
The Court of Appeals for the Ninth Circuit overturned Chen’s ruling in August 2025, finding that the district court had applied an incorrect set of standards when weighing the case.
They also said the company should have notified investors of “known trends, demands, commitments, events, or uncertainties that are reasonably likely to cause a material change in the company’s financial condition or results of operations.”
Meanwhile, the Trump administration, along with The Securities Industry and Financial Markets Association (SIFMA), nonprofit law firm Washington Legal Foundation, and a former Stanford Law School professor, all jumped in to support Robinhood’s petition to the Supreme Court.
SIFMA and the U.S. Chamber of Commerce argued in a brief that the Ninth Circuit’s ruling would force companies like Robinhood to issue an “avalanche of trivial information” when making public disclosures, change how they monitor data, and would “significantly increase the litigation risk associated with issuing public securities.”
