Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 1 of 53

1 Joseph R. Saveri (State Bar No. 130064)

Steven N. Williams (State Bar No. 175489)
2 Christopher K.L. Young (State Bar No. 318371)
Anupama K. Reddy (State Bar No. 324873)
3 JOSEPH SAVERI LAW FIRM, INC.
601 California Street, Suite 1000
4 San Francisco, California 94108
Telephone: (415) 500-6800
5 Facsimile: (415) 395-9940
Email: jsaveri@saverilawfirm.com
6 swilliams@saverilawfirm.com
cyoung@saverilawfirm.com
7 areddy@saverilawfirm.com

8 Counsel for Individual and Representative Plaintiffs

Shane Cheng and Terell Sterling
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10
UNITED STATES DISTRICT COURT
11
NORTHERN DISTRICT OF CALIFORNIA
12

13 Case No.
SHANE CHENG and TERELL STERLING,
14 individually and on behalf of others similarly CLASS ACTION COMPLAINT
situated,
15
Plaintiffs,
16 v.
DEMAND FOR JURY TRIAL
17 ALLY FINANCIAL INC.;
ALPACA SECURITIES LLC;
18 CASH APP INVESTING LLC;
SQUARE INC.;
19 DOUGH LLC;
MORGAN STANLEY SMITH BARNEY LLC;
20 E*TRADE SECURITIES LLC;
E*TRADE FINANCIAL CORPORATION;
21 E*TRADE FINANCIAL HOLDINGS, LLC;
ETORO USA SECURITIES, INC.;
22 FREETRADE, LTD.;
INTERACTIVE BROKERS LLC;
23 M1 FINANCE, LLC;
OPEN TO THE PUBLIC INVESTING, INC.;
24 ROBINHOOD FINANCIAL, LLC;
ROBINHOOD MARKETS, INC.;
25 ROBINHOOD SECURITIES, LLC; IG
GROUP HOLDINGS PLC;
26 TASTYWORKS, INC.;
TD AMERITRADE, INC.;
27 THE CHARLES SCHWAB CORPORATION;
CHARLES SCHWAB & CO. INC.;
28 FF TRADE REPUBLIC GROWTH, LLC ;
TRADING 212 LTD.;

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1 TRADING 212 UK LTD.;

WEBULL FINANCIAL LLC;
2 FUMI HOLDINGS, INC.;
STASH FINANCIAL, INC.;
3 BARCLAYS BANK PLC;
CITADEL ENTERPRISE AMERICAS, LLC;
4 CITADEL SECURITIES LLC;
MELVIN CAPITAL MANAGEMENT LP;
5 SEQUOIA CAPITAL OPERATIONS LLC;
APEX CLEARING CORPORATION;
6 THE DEPOSITORY TRUST & CLEARING
CORPORATION,
7
Defendants.
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i CLASS ACTION COMPLAINT

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1
TABLE OF CONTENTS
2
Page(s)
3

4 INTRODUCTION ......................................................................................................................1 

5 JURISDICTION AND VENUE ................................................................................................. 3 

6 PARTIES..................................................................................................................................... 5 

7 A.  Plaintiff Shane Cheng .......................................................................................... 5 

8 B.  Plaintiff Terell Sterling......................................................................................... 5 

9 C.  Brokerage Defendants .......................................................................................... 5 

10 D.  Fund Defendants ................................................................................................10 

11 E.  Clearinghouse Defendants .................................................................................. 11 

12 AGENTS AND CO-CONSPIRATORS .................................................................................... 11 

13 CLASS ALLEGATIONS ...........................................................................................................12 

14 FACTUAL ALLEGATIONS ..................................................................................................... 14 

15 CLAIMS FOR RELIEF ............................................................................................................ 38 

16 COUNT ONE .......................................................................................................................... 38 

17 COUNT TWO .......................................................................................................................... 40 

18 COUNT THREE ...................................................................................................................... 42 

19 COUNT FOUR ........................................................................................................................ 43 

20 COUNT FIVE .......................................................................................................................... 44 

21 COUNT SIX ............................................................................................................................. 45 

22 COUNT SEVEN ...................................................................................................................... 46 

23 COUNT EIGHT ...................................................................................................................... 47 

24 COUNT NINE ......................................................................................................................... 48 

25 PRAYER FOR JUDGMENT .................................................................................................... 48 

26 JURY TRIAL DEMANDED .................................................................................................... 50 

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ii CLASS ACTION COMPLAINT

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1 Plaintiffs Shane Chang and Terell Sterling, on behalf of themselves and all others similarly

2 situated, bring this Class Action Complaint against Defendants for violations of Section 1 of the

3 Sherman Act, 15 U.S.C. § 1, Section 16 of the Clayton Act, 15 U.S.C. § 26, state antitrust and consumer

4 protection laws, and the common law as follows:

5 INTRODUCTION

6 1. This case is about individual investors (the “Retail Investors”) who invested their hard-

7 earned money in the stock market and were stripped of the rights to control their investments due to a

8 large, overarching conspiracy to prevent the market from operating freely and to stop the Defendants

9 from hemorrhaging losses as a result of their highly speculative short selling strategies.

10 2. Retail Investors or individual investors are non-professional investors that make

11 individual investments on their own behalf. Retail Investors purchase assets such as stocks, bonds,

12 securities, mutual funds, and exchange traded funds (ETFs). They execute their personal trades through

13 websites, apps and trading platforms provided by brokerage firms or other investment service providers.

14 Retail Investors tend to invest smaller amounts, in contrast as compared to institutional investors, and

15 have little ability to influence market prices or market dynamics on their own.

16 3. Generally, Retail Investors pay brokerages a fee or commission for personal trades to

17 their brokerages.

18 4. Some brokerages, like Defendant Robinhood, do not charge their investors a fee per

19 transaction, but instead earn revenue through rebates, kickbacks and other payments from market

20 makers like the Clearinghouse Defendants.

21 5. Some individual investors are members of online financial discussion forums on Reddit,

22 Facebook, TikTok and elsewhere, where they are able to share and discuss their market research and

23 observations and help like-minded peers benefit from their research and potentially identify good

24 opportunities for investment.

25 6. Based on their research, and observations, the Retail Investors, through stock

26 brokerages, including the Brokerage Defendants, purchased and invested in certain stocks—Gamestop

27 (GME), AMC Theaters (AMC), American Airlines (AAL), Bed Bath & Beyond (BBBY),

28 Blackberry (BB), Express (EXPR), Koss (KOSS) Naked Brand Group (NAKD), Nokia (NOK),

1 CLASS ACTION COMPLAINT

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1 Sundial Growers Inc. (SNDL), Tootsie Roll Industries (TR), and Trivago NV (TRVG) (the “Relevant

2 Securities”)—that they believed would grow, increase in price and serve as good investment

3 opportunities.

4 7. Several large hedge funds and investment firms, including Citadel Enterprise Americas

5 LLC, Citadel Securities LLC, Melvin Capital Management LP, and unnamed co-conspirators, acquired

6 and possessed massive “short” positions in the Relevant Securities.

7 8. “Short” sellers borrow shares or other interests in corporate stock, securities, or other

8 assets. In so doing, they bet that prices of the securities will decrease. If the stock prices in fact drop, a

9 short seller buys the stock back at a lower price and returns it to the lender. The difference between the

10 sell price and the buy price is the profit. Short sellers essentially bet on a stock’s failure or decline rather

11 than its success or increase.

12 9. The Fund Defendants and other unnamed co-conspirators made short selling

13 investments in the Relevant Securities. In so doing, they made highly speculative bets. When the

14 Relevant Securities increased in value, due in large part to Retail Investors purchasing the Relevant

15 Securities and increasing stock prices, the Fund Defendants, Clearinghouse Defendants and unnamed

16 co-conspirators were exposed to potential losses of several billion dollars.

17 10. As Retail Investors and others continued to purchase the Relevant Securities, the Fund

18 Defendants, Clearinghouse Defendants and unnamed co-conspirators were caught in a classic “short

19 squeeze.” A “short squeeze” occurs when a stock or other asset rises sharply in value, distressing short

20 positions. Short selling investors are faced with a rapid increase in the shorted asset’s value, exposing

21 the short seller to increased and theoretically limitless loss. As the price of the asset rises, short sellers

22 may face pressure to buy back stock to exit their short positions to mitigate their potential losses. In the

23 absence of intervention, as short sellers exit their short positions to buy back stocks to cover their

24 shorts, the purchase of stock further increases the price of the stock.

25 11. The Brokerage Defendants, Fund Defendants and Clearinghouse Defendants (together

26 the “Defendants”) conspired to prevent the Retail Investors from buying any further stock and forcing

27 Retail Investors to sell their Relevant Securities to artificially suppress stock prices of the Relevant

28 Securities.

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1 12. On January 27, 2021, after the close of the stock market and before the open of the

2 market the next day, the Fund Defendants coordinated and planned increased short volumes in

3 anticipation of short calls on January 28, 2021.

4 13. The Brokerage Defendants—that operate through websites and mobile applications—

5 disabled all buy features on their platforms and thereby left the Retail Investors with no choice but to

6 sell or hold their rapidly dwindling stocks. The Brokerage Defendants did so to ensure that the stock

7 prices for the Relevant Securities go down in furtherance of the conspiracy. Other Brokerage

8 Defendants displayed loading graphics on the landing pages for these Relevant Securities to prevent

9 users from purchasing any more Relevant Securities. Plaintiffs and Class members, faced with an

10 imminent decrease in the price of their positions in the Relevant Securities due to the inability of Retail

11 Investors to purchase shares, were induced to sell their shares in the Relevant Securities at a lower price

12 than they otherwise would have. Additionally, Class members that would have purchased more stock in

13 the Relevant Securities given the upward trend in price could not do so.

14 14. By doing so, the Defendants and their co-conspirators forced Retail Investors to choose

15 between selling the Relevant Securities at a lower price or holding their rapidly declining positions in the

16 Relevant Securities. Defendants did so to drive the price of the Relevant Securities down.

17 15. Defendants and their co-conspirators conspired to prevent the Retail investors from

18 buying further stock in order to mitigate the Fund Defendants’ exposure in their short positions. By

19 forcing the Retail Investors to sell their Relevant Securities at lower prices than they otherwise would

20 have, Defendants artificially reduced the value of the Relevant Securities that Retail Investors either

21 sold or held on to.

22 JURISDICTION AND VENUE

23 16. Plaintiffs bring this action on their own behalf as well on behalf of the members of the

24 Class to recover damages, including treble damages, costs of suit, and reasonable attorneys’ fees arising

25 from Defendants’ violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, Section 16 of the Clayton

26 Act, 15 U.S.C. § 26, as well as any and all equitable relief afforded to them under the federal laws

27 pleaded herein.

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1 17. This Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331 because the

2 case arises under the Constitution, laws, or treaties of the United States.

3 18. This Court also has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1332(d) and

4 1367, in that (a) this is a class action in which the matter or controversy exceeds the sum of $5,000,000,

5 exclusive of interest and costs, and in which some members of the proposed Class are citizens of a state

6 different from some defendants; and (b) Plaintiffs’ state law claims form part of the same case or

7 controversy as their federal claims under Article III of the United States Constitution.

8 19. Jurisdiction and venue are proper in this judicial District pursuant to 28 U.S.C.

9 § 1391(b), (c) and (d), because a substantial part of the events giving rise to Plaintiffs’ claims occurred in

10 this District, a substantial portion of the affected interstate trade and commerce was carried out in this

11 District, and one or more of the Defendants reside in this District or are licensed to do business in this

12 District. Each Defendant has transacted business, maintained substantial contacts, or committed overt

13 acts in furtherance of the illegal scheme and conspiracy throughout the United States, including in this

14 District. The conspiracy occurred in this judicial District. The conspiracy has been directed at, and has

15 had the intended effect of, causing injury to persons residing in, located in, or doing business throughout

16 the United States, including in this District.

17 20. This Court has personal jurisdiction over each Defendant because, each Defendant: (a)

18 transacted business throughout the United States, including in this District; (b) transacted in substantial

19 amounts of the Relevant Securities throughout the United States; (c) had substantial contacts with the

20 United States, including this District; and/or (d) engaged in an antitrust conspiracy that was directed at

21 and had a direct, foreseeable, and intended effect of causing injury to the business or property of

22 persons residing in, located in, or doing business throughout the United States, including in this

23 District.

24 21. The activities of the Defendants and all co-conspirators—whether unnamed or as of yet

25 unknown—as described herein, were within the flow of, were intended to, and did have direct,

26 substantial, and reasonably foreseeable effects on the foreign and interstate commerce of the United

27 States.

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1 PARTIES

2 A. Plaintiff Shane Cheng

3 22. Plaintiff Shane Cheng is a resident of the State of California. Before January 28, 2021,

4 Plaintiff Cheng purchased and owned option contracts in Gamestop, AMC Theaters and Blackberry on

5 Robinhood and TD Ameritrade.

6 23. On January 28, 2021, Plaintiff Cheng attempted to purchase securities but was unable to

7 do so because Defendants had deactivated the “buy” features on their applications due to the

8 anticompetitive scheme.

9 24. Plaintiff Cheng was unable to search for the Relevant Securities on Defendant

10 Robinhood’s platform on January 28, 2021.

11 B. Plaintiff Terell Sterling

12 25. Plaintiff Terell Sterling is a resident of the State of California. Before January 28, 2021,

13 Plaintiff Sterling purchased and owned stocks and option contracts in AMC Theaters, Blackberry,

14 Gamestop, Naked Brand Group, and Nokia on Robinhood and E*Trade. Plaintiff Sterling bought these

15 Relevant Securities with cash and not on margin.

16 26. On January 28, 2021 Plaintiff Sterling attempted to purchase the Relevant Securities on

17 Defendants Robinhood and E*Trade’s web-based and mobile-based platforms but was prohibited from

18 doing so by the Defendants due the anticompetitive scheme.

19 27. On January 29, 2021, Plaintiff Sterling sold positions in Gamestop as a result of the

20 anticompetitive scheme.

21 C. Brokerage Defendants

22 a. Defendant Ally Financial Inc.

23 28. Defendant Ally Financial Inc. (“Ally”) is a Delaware corporation, with its headquarters

24 located at Ally Detroit Center 500, Woodward Ave., Floor 10, Detroit, Michigan. Ally provides financial

25 services including an electronic trading platform to trade financial assets. Ally sold Relevant Securities

26 directly to members of the Class during the Class Period.

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1 b. Defendant Alpaca Securities LLC

2 29. Defendant Alpaca Securities LLC (“Alpaca”) is a Delaware corporation, with its

3 headquarters at 20 N San Mateo Drive Suite 10, San Mateo, California. Alpaca provides financial

4 services including an electronic trading platform to trade financial assets. Alpaca sold Relevant

5 Securities directly to members of the Class during the Class Period.

6 c. Defendant Cash App

7 30. Defendant Cash App Investing LLC (“Cash App Investing”) is a Delaware corporation

8 headquartered at 920, SW 6th Avenue Ste. 1200, Portland, Oregon. Cash App Investing is a wholly

9 owned subsidiary of Square Inc. Cash App Investing provides financial services including an electronic

10 trading platform to trade financial assets. Cash App Investing sold Relevant Securities directly to

11 members of the Class during the Class Period. Square Inc. and Cash App Investing LLC are referred

12 collectively as “Cash App.”

13 31. Defendant Square Inc. is a Delaware corporation with its headquarters located at 1455

14 Market Street, Suite 600, San Francisco, California.

15 d. Defendant Dough

16 32. Defendant Dough LLC (“Dough”) is a Delaware limited-liability corporation, with its

17 headquarters located at 327 N. Aberdeen Street, Chicago, Illinois. Dough provides financial services

18 including an electronic trading platform to trade financial assets. Dough sold Relevant Securities

19 directly to members of the Class during the Class Period.

20 e. Defendant E*Trade

21 33. Defendant Morgan Stanley Smith Barney LLC (“Morgan Stanley”) is a Delaware

22 limited-liability corporation and parent company of E*Trade, with its headquarters located at 1585

23 Broadway Avenue, New York, New York. Morgan Stanley is the owner and ultimate parent of E*Trade

24 Securities LLC, E*Trade Financial Corporation, and E*Trade Financial Holdings. Morgan Stanley,

25 E*Trade Securities LLC, E*Trade Financial Corporation, and E*Trade Financial Holdings are

26 collectively referred to as “E*Trade.”

27 34. Defendant E*Trade Securities LLC is a Delaware limited-liability corporation, with its

28 headquarters at 671 North Glebe Road, Ballston Tower, Arlington, Texas.

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1 35. Defendant E*Trade Financial Corporation is a Delaware corporation, with its

2 headquarters at 671 North Glebe Road, Ballston Tower, Arlington, Texas.

3 36. Defendant E*Trade Financial Holdings, LLC is a Delaware limited-liability corporation,

4 with its headquarters at 671 North Glebe Road, Ballston Tower, Arlington, Texas.

5 f. Defendant eToro

6 37. Defendant Etoro USA Securities, INC. (“eToro”) is a Delaware corporation and owner

7 of the application eToro, headquartered at 221 River St., 9th floor, Hoboken, New Jersey. eToro

8 provides financial services including an electronic trading platform to trade financial assets. eToro sold

9 Relevant Securities directly to members of the Class during the Class Period.

10 g. Defendant Freetrade

11 38. Defendant Freetrade, Ltd. (“Freetrade”) is a company incorporated in the United

12 Kingdom, headquartered at 32-38 Leman Street, London, United Kingdom. Freetrade provides

13 financial services including an electronic trading platform to trade financial assets. Freetrade sold

14 Relevant Securities directly to members of the Class during the Class Period.

15 h. Defendant Interactive Brokers

16 39. Defendant Interactive Brokers LLC (“Interactive Brokers”) is a Delaware limited-

17 liability corporation headquartered at 1 Pickwick Plaza, Greenwich, Connecticut. Interactive Brokers

18 provides financial services including an electronic trading platform to trade financial assets. Interactive

19 Brokers sold Relevant Securities directly to members of the Class during the Class Period.

20 i. Defendant M1 Finance

21 40. Defendant M1 Finance, LLC (“M1 Finance”) is a Delaware corporation headquartered

22 at 200 North La Salle Street, Suite 800, Chicago, Illinois. M1 Finance provides financial services

23 including an electronic trading platform to trade financial assets. M1 Finance sold Relevant Securities

24 directly to members of the Class during the Class Period.

25 j. Defendant Public.com

26 41. Defendant Open To The Public Investing, Inc. (“Public.com”) is a New York

27 corporation, headquartered at 1 State Street Plaza, 10th Floor, New York, New York. Public.com

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1 provides financial services including an electronic trading platform to trade financial assets. Public.com

2 sold Relevant Securities directly to members of the Class during the Class Period.

3 k. Defendant Robinhood

4 42. Defendant Robinhood Markets, Inc. is a Delaware corporation with its principal place of

5 business at 85 Willow Road, Menlo Park, California. Defendant Robinhood Markets, Inc. is the

6 corporate parent of and controls the affairs of Defendants Robinhood Financial, LLC and Robinhood

7 Securities, LLC.

8 43. Defendant Robinhood Financial, LLC is a Delaware corporation with its principal place

9 of business at 85 Willow Road, Menlo Park, California. It is a wholly- owned subsidiary of Robinhood

10 Markets, Inc.

11 44. Defendant Robinhood Securities, LLC is a Delaware corporation with its principal place

12 of business at 500 Colonial Center Parkway, Suite 100, Lake Mary, Florida. It is a wholly owned

13 subsidiary of Defendant Robinhood Markets, Inc. Defendant Robinhood Financial (collectively, with

14 Robinhood Financial, LLC and Robinhood Markets, Inc. as “Robinhood”).

15 45. Robinhood provides financial services including an electronic trading platform to trade

16 financial assets. Robinhood sold Relevant Securities directly to members of the Class during the Class

17 Period.

18 l. Defendant Stash

19 46. Defendant Barclays Bank PLC is a company incorporated in the United Kingdom, and

20 headquartered at 745 7th Ave New York, New York. Barclays Bank PLC is the ultimate corporate parent

21 of, and controls the affairs of Stash Financial, Inc.

22 47. Defendant Stash Financial, Inc. (“Stash”) is a Delaware corporation and owner of the

23 application Stash, headquartered at 500 7th Avenue,18th Floor, New York, New York. Stash is a wholly-

24 owned subsidiary of Barclays Bank PLC. Stash provides financial services including an electronic

25 trading platform to trade financial assets. Stash sold Relevant Securities directly to members of the

26 Class during the Class Period.

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1 m. Defendant Tastyworks

2 48. Defendant IG Group Holdings PLC is a Delaware public limited company and ultimate

3 corporate parent of and controls the affairs Tastyworks, Inc., headquartered at 200 West Jackson Blvd.,

4 Suite 1450, Chicago, Illinois.

5 49. Defendant Tastyworks, Inc. is a Delaware corporation and wholly-owned subsidiary of

6 IG Group Holdings PLC, headquartered at 100 West Fulton Market Street, Suite 220, Chicago, Illinois

7 (IG Holdings and Tastyworks, Inc. collectively, “Tastyworks”).

8 50. Tastyworks provides financial services including an electronic trading platform to trade

9 financial assets. Tastyworks sold Relevant Securities directly to members of the Class during the Class

10 Period.

11 n. Defendant TD Ameritrade

12 51. Defendant The Charles Schwab Corporation is a Delaware corporation with its principal

13 place of business at 211 Main Street, San Francisco, California. The Charles Schwab Corporation is the

14 ultimate corporate parent of and controls the affairs of Charles Schwab & Co., Inc. and TD Ameritrade

15 Inc.

16 52. Defendant Charles Schwab & Co. Inc. is a California corporation with its principal place

17 of business at 211 Main Street, San Francisco, California. Charles Schwab & Co. Inc. is a wholly owned

18 subsidiary of The Charles Schwab Corporation.

19 53. Defendant TD Ameritrade, Inc., is a New York corporation with its principal place of

20 business in Illinois. As of October 2020, The Charles Schwab Corporation acquired TD Ameritrade,

21 Inc. The Charles Schwab Corporation, Charles Schwab & Co., Inc. and TD Ameritrade, Inc.

22 collectively, “TD Ameritrade.” TD Ameritrade provides financial services including an electronic

23 trading platform to trade financial assets. TD Ameritrade sold Relevant Securities directly to members

24 of the Class during the Class Period.

25 o. Defendant Trade Republic

26 54. Defendant FF Trade Republic Growth, LLC (“Trade Republic”) is a Delaware

27 corporation, headquartered at One Letterman Drive, Building D, 5th Floor, San Francisco, California.

28 Trade Republic provides financial services including an electronic trading platform to trade financial

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1 assets. Trade Republic sold Relevant Securities directly to members of the Class during the Class

2 Period.

3 p. Defendant Trading 212

4 55. Defendant Trading 212 Ltd. is a Bulgarian company headquartered at 3 Lachezar

5 Stanchev Str., Litex Tower, Floor 10, Sofia 1797, Bulgaria. Trading 212 Ltd. is the ultimate corporate

6 parent of and controls the affairs of Trading 212 UK Ltd.

7 56. Defendant Trading 212 UK Ltd. is a company incorporated in the United Kingdom

8 headquartered at 107 Cheapside, London, United Kingdom. Trading 212 UK Ltd. a wholly-owned

9 subsidiary of Trading 212 Ltd. (Trading 212 Ltd. and Trading 212 UK Ltd. collectively, “Trading 212”).

10 Trading 212 provides financial services including an electronic trading platform to trade financial assets.

11 Trading 212 sold Relevant Securities directly to members of the Class during the Class Period.

12 q. Defendant WeBull

13 57. Defendant Fumi Holdings, Inc. is a Chinese corporation. Fumi Holdings, Inc. and

14 headquartered in Hunan, China. Fumi Holdings, Inc. is the corporate parent of, and controls the affairs

15 of Webull Financial LLC.

16 58. Defendant Webull Financial LLC (“WeBull”) is a Delaware corporation and wholly-

17 owned subsidiary of Fumi Holdings, Inc., headquartered at 44 Wall Street, Ste 501, New York, New

18 York. WeBull is a wholly-owned subsidiary of Fumi Holdings, Inc. WeBull provides financial services

19 including an electronic trading platform to trade financial assets. WeBull sold Relevant Securities

20 directly to members of the Class during the Class Period.

21 D. Fund Defendants

22 a. Defendant Citadel

23 59. Defendant Citadel Enterprise Americas LLC is a Delaware limited-liability corporation,

24 headquartered at 131 South Dearborn Street, Chicago, Illinois. Citadel Enterprise Americas LLC is the

25 corporate parent of, and controls the affairs of Citadel Securities LLC.

26 60. Defendant Citadel Securities LLC is a Delaware limited-limited corporation,

27 headquartered at 131 South Dearborn Street, Chicago, Illinois. Citadel Securities LLC is a wholly-

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1 owned subsidiary of Citadel Enterprise Americas LLC. Citadel Enterprise Americas, LLC and Citadel

2 Securities LLC collectively, “Citadel.”

3 61. Defendant Citadel took short positions in the Relevant Securities. Citadel actively

4 participated in the conspiracy and the wrongful acts alleged herein.

5 b. Defendant Melvin Capital

6 62. Defendant Melvin Capital Management LP (hereinafter “Melvin Capital”) is a

7 Delaware limited partnership headquartered at 535 Madison Avenue, 22nd Floor, New York, New York.

8 63. Defendant Melvin Capital took short positions in the Relevant Securities. Melvin

9 Capital actively participated in the conspiracy and the wrongful acts alleged herein.

10 c. Defendant Sequoia

11 64. Defendant Sequoia Capital Operations LLC (“Sequoia”) is a Delaware limited-liability

12 corporation, headquartered at 2800 Sand Hill Road, Suite 101, Menlo Park, California.

13 65. Defendant Sequoia actively participated in the conspiracy and the wrongful acts alleged

14 herein.

15 E. Clearinghouse Defendants

16 a. Defendant Apex

17 66. Defendant Apex Clearing Corporation (“Apex”) is a New York corporation

18 headquartered at One Dallas Center, 350 N. St. Paul, Suite 1300, Dallas, Texas.

19 67. Defendant Apex participated in the conspiracy and the wrongful acts alleged herein.

20 b. Defendant Depository Trust & Clearing Corporation

21 68. Defendant The Depository Trust & Clearing Corporation (“DTCC”) is a New York

22 company headquartered at 55 Water Street, New York, New York.

23 69. Defendant DTCC participated in the conspiracy and the wrongful acts alleged herein.

24 AGENTS AND CO-CONSPIRATORS

25 70. The anticompetitive and unlawful acts alleged against the Defendants in this class action

26 complaint were authorized, ordered or performed by the Defendants’ respective officers, agents,

27 employees, representatives, or shareholders while actively engaged in the management, direction, or

28 control of the Defendants’ businesses or affairs.

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1 71. The Defendants’ agents operated under the explicit and apparent authority of their

2 principals.

3 72. Each Defendant, and its subsidiaries, affiliates and agents operated as a single unified

4 entity.

5 73. Various persons and/or firms not named as Defendants herein may have participated as

6 co-conspirators in the violations alleged herein and may have performed acts and made statements in

7 furtherance thereof.

8 74. Each Defendant acted as the principal, agent, or joint venture of, or for other Defendants

9 with respect to the acts, violations, and common course of conduct alleged herein.

10 CLASS ALLEGATIONS

11 75. Plaintiffs bring this action for damages and injunctive relief on behalf of themselves and

12 all others similarly situated as a class action pursuant to Rules 23(a), (b)(2) and (b)(3) of the Federal

13 Rules of Civil Procedure, on behalf of the following Class:

14 All persons or entities in the United States that directly purchased securities in GameStop Corp.
(GME), AMC Entertainment Holdings Inc. (AMC), American Airlines Group Inc. (AAL), Bed
15 Bath & Beyond Inc. (BBBY), BlackBerry Ltd. (BB), Express, Inc. (EXPR), Koss Corporation
16 (KOSS), Naked Brand Group Ltd. (NAKD), Nokia Corp. (NOK), Sundial Growers Inc.
(SNDL), Tootsie Roll Industries, Inc. (TR), or Trivago N.V. (TRVG) from one or more of the
17 Defendants between January 1, 2021 through and until the anticompetitive effects of Defendants’
unlawful conduct cease (the “Class Period”).
18

19 76. This Class definition specifically excludes the following person or entities:

20 a. Any of the Defendants named herein;

21 b. Any of the Defendants’ co-conspirators;

22 c. Any of Defendants’ parent companies, subsidiaries, and affiliates;

23 d. Any of Defendants’ officers, directors, management, employees,

24 subsidiaries, affiliates, or agents;

25 e. All governmental entities; and

26 f. The judges and chambers staff in this case, as well as any members of

27 their immediate families.

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1 77. Plaintiffs do not know the exact number of Class members, because such information is

2 in the exclusive control of Defendants. Plaintiffs are informed and believe that, due to the nature of the

3 trade and commerce involved, there are millions of Class members geographically dispersed throughout

4 the United States and elsewhere, such that joinder of all Class members in the prosecution of this action

5 is impracticable.

6 78. Plaintiffs’ claims are typical of the claims of their fellow Class members because

7 Plaintiffs directly purchased stocks and instruments via the Brokerages. Plaintiffs and all Class members

8 were damaged by the same wrongful conduct of Defendants as alleged herein, and the relief sought

9 herein is common to all members of the Class.

10 79. Plaintiffs will fairly and adequately represent the interests of the Class because they

11 purchased the Relevant Securities directly from the one or more of the Defendants and have no conflicts

12 with any other members of the Class. Furthermore, Plaintiffs have retained sophisticated and

13 competent counsel who is experienced in prosecuting antitrust class actions, as well as other complex

14 litigation.

15 80. Numerous questions of law or fact common to the entire Class—including, but not

16 limited to those identified below—arise from Defendants’ anticompetitive and unlawful conduct:

17 a. whether Defendants combined or conspired with one another to artificially

18 suppress prices for the Relevant Securities at any time during the Class Period to

19 purchasers in the United States;

20 b. whether Defendants combined or conspired with one another to fix, raise,

21 maintain, stabilize and/or suppress prices for Relevant Securities at any time

22 during the Class Period to purchasers in the United States;

23 c. whether Defendants’ conduct caused the prices of the Relevant Securities, sold

24 or held by the Retail Investors in the United States at any time during the Class

25 Period to be artificially fixed, suppressed, maintained or stabilized;

26 d. whether Plaintiffs and the other members of the Class were injured by

27 Defendants’ conduct and, if so, the appropriate Class-wide measure of damages;

28 and

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 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 17 of 53

1 e. whether Plaintiffs and other members of the Class are entitled to, among other

2 things, injunctive relief, and, if so, the nature and extent of such relief.

3 81. These and other questions of law and fact are common to the Class and predominate

4 over any questions affecting the Class members individually.

5 82. Defendants have acted on grounds generally applicable to the Class, thereby making final

6 injunctive relief appropriate with respect to the Class as a whole. This class action is superior to

7 alternatives, if any, for the fair and efficient adjudication of this controversy. Prosecuting the claims

8 pleaded herein as a class action will eliminate the possibility of repetitive litigation. There will be no

9 material difficulty in the management of this action as a class action.

10 83. The prosecution of separate actions by individual Class members would create the risk

11 of inconsistent or varying adjudications, establishing incompatible standards of conduct for Defendants.

12 FACTUAL ALLEGATIONS

13 84. Retail Investors participate in online financial discussion forums, including but not

14 limited to Reddit, Facebook, and TikTok. Through these forums, and elsewhere, Retail Investors are

15 able to trade information about their market observations and help like-minded peers benefit from their

16 research. During the Relevant Period, Retail Investors communicated and exchanges information

17 regarding the Relevant Securities, among other things.

18 85. Based on their research, the Retail Investors, through stockbrokers such as the

19 Brokerage Defendants, invested in the Relevant Securities that they believed would increase in price and

20 grow.

21 86. The Fund Defendants and unnamed co-conspirators purchased and held “short”

22 positions in the Relevant Securities. By the nature of the short positions, the Fund Defendants, the

23 Clearinghouse Defendants and certain unnamed co-conspirators stood to benefit and substantially profit

24 were the prices of the Relevant Securities to decrease. Short-selling is highly speculative. In a free and

25 open market, there would be substantial financial risk that prices might increase causing the short sellers

26 to cover the contract at a loss.

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 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 18 of 53

1 87. The Fund Defendants, Clearinghouse Defendants and unnamed co-conspirators

2 predicted incorrectly. The Relevant Securities grew in value, exposing the Defendant Funds and

3 Clearing Houses to billions of dollars in losses.

4 88. Rather than facing the consequences of their risky bets, the Fund Defendants,

5 Clearinghouse Defendants and their co-conspirators entered into an agreement and conspiracy to

6 prevent the market from operating, to prevent decrease in prices of the Relevant Securities, to avoid

7 their own financial losses and to cause financial losses to Plaintiffs and the members of the Class.

8 Background

9 89. Retail Investors or individual investors are non-professional investors that execute their

10 personal trades through brokerage firms or investment accounts.

11 90. Retail Investors discuss and exchange information regarding investments including the

12 Relevant Securities on financial discussion forums on social networking sites like Reddit, Facebook,

13 Twitter, TikTok and Discord.

14 91. Many of the Brokerage Defendants represented to the Retail Investors that they were

15 offering free brokerage services to facilitate fair trading in the stock market.

16 92. The Brokerage Defendants are stockbrokers that run online platforms from which

17 Plaintiffs and other Retail Investors directly purchase and sell securities during the Class Period.

18 93. The Retail Investors identified as early as 2019, that Gamestop’s (GME) stock value was

19 lower than they expected it to be based on Gamestop’s publicly available financial disclosures and future

20 prospects.

21 94. Gamestop for example, despite being a brick-and-mortar store specializing in video

22 games that can now be downloaded from a person’s home, possessed ample cash reserves, was regularly

23 paying off its debts and was presented new opportunity with the release of the next generation of

24 gaming platforms. Despite this, in 2019, Gamestop’s stock was valued as low as $3 per share. Retail

25 Investors correctly deduced that Gamestop was undervalued because large financial institutions had

26 taken large short positions, essentially betting on Gamestop’s failures. Due to Gamestop’s low stock

27 price, the Retailer Investors correctly determined Gamestop represented a good investment

28 opportunity.

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 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 19 of 53

1 95. In addition to Gamestop, Retail Investors invested in the other Relevant Securities based

2 on their valuation and anticipated business performance. For example, Retail Investors invested in

3 Nokia (NOK) because Nokia, which had historically focused its business on the manufacture and sale of

4 mobile phone handsets, had been expanding in other industries, including investing in 5G

5 communication networks, including towers and other infrastructure.

6 96. Like other Retail Investors, Plaintiffs purchased “long” positions in these companies,

7 including stocks, option contracts and other securities.

8 97. In a free and open market, stock prices are determined by the laws of supply and demand

9 as purchasers and sellers bid and ask stock prices. As more investors buy a certain stock, and bid up the

10 stock’s prices, the market price for the stock rises. Conversely, as investors sell stock, the stock price is

11 bid down and the market price for the stock declines.

12 98. If an investor has long positions, it means that the investor has bought and owns those

13 shares of stocks (in contrast to a short position, where the investor owes those stocks to someone, but

14 does not actually own them yet). Investors holding long positions generally own the stock with the

15 expectation that it will rise in value and it will be worth more than they paid for it. When the investor

16 sells a long position, the profit or loss from the same is the difference between the purchase price of the

17 security and the sale price of the security.

18 99. Retail Investors took long positions in the Relevant Securities with the expectation that

19 the stock would increase in value, generally because they believed that the respective companies’

20 business prospects were improving. Investors in the Relevant Securities generally believed they were

21 good investment opportunities, and that prices of their securities would rise as can be expected when a

22 market is operating freely, without fraud, conspiracy or manipulation.

23 100. Institutional investors, including the Fund Defendants and unnamed co-conspirators,

24 acquired massive “short” positions in the Relevant Securities.

25 101. As indicated above, “short” sellers borrow shares of an asset that they believe will fall in

26 price only to buy them after the asset depreciates in value. Short sellers essentially bet on an asset’s

27 failure rather than its success. Profit is made in the difference between the value lost at the time sold

28 versus when the time when the short position is bought. For example, a short seller borrows a share of

16 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 20 of 53

1 Company X (for a fee) from a broker which is presently valued at $10. The short seller immediately sells

2 the share and waits for the value of the share to drop. The share price then falls to $4. The short seller

3 then purchases the share at the reduced value of $4 and returns it to the lender and earns the difference

4 of $6. Short sales are often time limited. On the other hand, if the price of the share rises to $20, the

5 short seller would need to purchase the share at $20 to return it to the lender, thereby incurring a loss of

6 $10.

7 102. To a short seller, the more a stock price increases, the greater the loss to the short seller.

8 The theoretical loss to a short investor who predicts wrongly is potentially infinite. Should a short seller

9 want to exit a short position in the face of rapidly increasing stock price, they must “buy back” the stock

10 at the higher price to return to the institution they borrowed the share from. Risk from bad short selling

11 investments is potentially ruinous and catastrophic.

12 103. On the other hand, an investor who purchases a stock “long” is limited to a maximum

13 loss of the price of an asset potentially decreasing to zero.

14 104. Defendant Melvin Capital, for example, shorted approximately 140% of Gamestop’s total

15 stock. The practice of short selling more shares than exists is itself an illegal practice known as “naked

16 shorting.” In a “naked” short sale, a seller does not borrow or arrange to borrow the necessary

17 securities in time to deliver them to the buyer within the standard three-day settlement period.

18 Although abusive “naked” short selling is not defined in the federal securities laws, it refers generally to

19 selling short without having stock available for delivery and intentionally failing to deliver stock within

20 the standard three-day settlement period.

21 105. As a result of Retail Investors purchasing long positions in the Relevant Securities, the

22 stock price of these companies began to rise. As the value of the Relevant Securities increased, this

23 resulted in a “short squeeze.”

24 106. A short squeeze occurs when a stock or other asset rises sharply in value, distressing

25 short positions in the asset. A short squeeze therefore is when investors in short positions are faced with

26 a rapid increase in the shorted asset’s value, exposing the short seller to increased loss. As the price of

27 the asset rises, short sellers may face pressure to buy back stock to exit their short positions to mitigate

28

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 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 21 of 53

1 their losses. In the absence of intervention, as short sellers exit their short positions to buy back stocks

2 to cover their shorts, the purchase of stock further increases the price of the stock.

3 107. For example, with regards to Gamestop, a popular Reddit user who also creates content

4 on Youtube under the handle Roaring Kitty (“Roaring Kitty”) had reason to believe that hedge funds

5 had entered into these short positions with respect to Gamestop’s stock. Based on his own financial

6 analysis, Roaring Kitty determined that Gamestop was actually undervalued due to coordinated shorting

7 of Gamestop by numerous funds and made an initial purchase of $50,000 of Gamestop stock and

8 published his investments on the Reddit financial discussion forum WallStreetBets.

9 108. WallStreetBets is a financial discussion forum on Reddit. WallStreetBets is characterized

10 by a particular culture centered around discussion of financial investments and memes. Many users on

11 WallStreetBets are sophisticated, financially savvy Retail Investors with business acumen.

12 109. Roaring Kitty regularly updated and continued to publish information and analysis that

13 Gamestop stocks were undervalued. In August 2020, Roaring Kitty posted an in-depth analysis of

14 Gamestop’s stock on his Youtube channel, walking his subscribers through his extensive analysis of the

15 value proposition of the stock.

16 110. Attention to Gamestop’s stock was not limited to online financial communities and

17 discussion forums. Dr. Michael Burry (who gained fame for his investment decisions in relation with

18 correctly predicting the 2008 financial crisis as presented in the film The Big Short) and his investment

19 firm Scion Asset Management, LLC spent nearly $15 million to purchase stock in Gamestop in 2019 at

20 share prices between $2 and $4.20 per share for a 5% ownership position in Gamestop. Retail Investors

21 took notice and Gamestop’s price steadily increased.

22 111. Ryan Cohen, the co-founder and former CEO of the pet e-commerce website

23 Chewy.com, invested $76 million and acquired a 12.9% stake in Gamestop in 2020. Several Retail

24 Investors were optimistic about Ryan Cohen’s involvement in Gamestop, who joined the board of

25 directors on January 11, 2021.

26 112. Institutional investors, holding large short positions in Gamestop’s stock and other

27 Relevant Securities began to push back and attempted to message on media and elsewhere that the

28 Relevant Securities were not as valuable as the Retail Investors thought. For example, on January 21,

18 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 22 of 53

1 2021, when Gamestop was valued at approximately $20 per share, Andrew Left, the founder of Citron

2 Research, a capital research and investment firm, gave an interview explaining why he was shorting

3 Gamestop.

4 113. In response, Retail Investors further went long on Gamestop and other Relevant

5 Securities. Given the operation of a free and open market, the prices of Gamestop and other Relevant

6 Securities was bid up and prices increased. This exposed short sellers in those stocks, including the

7 Fund Defendants, to substantial loses. It was a textbook short squeeze.

8 114. On January 21, 2021, the Relevant Securities’ stock prices increased substantially. For

9 example, on January 8, 2021, Gamestop’s stock was priced at $17.69 per share. On January 27, 2021,

10 driven by investments from Retail Investors, Gamestop’s stock closed at $347.51. Other Relevant

11 Securities experienced similar increases.

12 115. The figure below summarizes the prices of Gamestop’s stock from December 28, 2020

13 through January 29, 2021.

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19 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 23 of 53

1 116. The figure below summarizes the prices of Nokia Corporation’s stock from December

2 28, 2020 through January 29, 2021.

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15 117. The figure below summarizes the prices of American Airlines Group Inc.’s stock from

16 December 28, 2020 through January 29, 2021.

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20 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 24 of 53

1 118. The figure below summarizes the prices of Sundial Growers Inc.’s stock from December

2 28, 2020 through January 29, 2021.

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15 119. The figure below summarizes the prices of Naked Brand Group Limited’s stock from

16 December 28, 2020 through January 29, 2021.

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21 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 25 of 53

1 120. The figure below summarizes the prices of AMC Entertainment Holdings, Inc.’ stock

2 from December 28, 2020 through January 29, 2021.

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14 121. The figure below summarizes the prices of Koss Corporation’s stock from December 28,
15 2020 through January 29, 2021.
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22 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 26 of 53

1 122. The figure below summarizes the prices of Trivago stock from December 28, 2020

2 through January 29, 2021.

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14 123. The figure below summarizes the prices of Bed Bath & Beyond stock from December
15 28, 2020 through January 29, 2021.
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23 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 27 of 53

1 124. The figure below summarizes the prices of Express stock from December 28, 2020

2 through January 29, 2021.

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15 125. The figure below summarizes the prices of Tootsie Roll Industries Inc.’s stock from
16 December 28, 2020 through January 29, 2021.
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24 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 28 of 53

1 126. The figure below summarizes the prices of Blackberry’s stock from December 28, 2020

2 through January 29, 2021.

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16 127. The tremendous growth in the Relevant Securities’ stock price resulted in significant

17 and potentially disastrous exposure of institutional investors, and hedge funds, including the Fund

18 Defendants and their co-conspirators holding short positions in the Relevant Securities.

19 128. Defendant Citadel Investments, for example, holds a significant interest in Defendant

20 Melvin Capital (who had the illegal naked 140% short position) and was forced to inject around $3 billion

21 along with another fund, Point72, to bailout Melvin Capital from its distressed short position.

22 129. In essence, small Retail Investors concluded that institutional investors had severely

23 undervalued the Relevant Securities by shorting them, presenting a good investment opportunity. By

24 investing in the undervalued Relevant Securities, the Retail Investors were outfoxing Wall Street at its

25 own game.

26 The Illegal Scheme

27 130. Rather than use their financial acumen to compete and invest in good opportunities in

28 the market to recoup the loss in their short positions the growth in the Relevant Securities’ prices

25 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 29 of 53

1 represented, or paying the price for their highly speculative bad bets, Defendants instead hatched an

2 anticompetitive scheme to limit trading in the Relevant Securities.

3 131. After the market closed on January 27, 2021, after-hours revealed suspicious

4 coordinated trading activity. After-hours trading is not permitted for individual Retail Investors and is

5 restricted to institutional investors such as hedge funds.

6 132. Analytics revealed a significant volume of GME short volume immediately prior to the

7 markets opening on January 28, i.e., after-hour traders were taking more short positions suggesting

8 after-hour traders were trading in anticipation of a GME sell-off. The grey lines in chart below represent

9 the volume of short positions in GME. As demonstrated by the grey lines below, the volume of short

10 positions was much higher before January 28, 2021 than any of the prior days and had steadily increased

11 the week prior.

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26 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 30 of 53

1 133. As described above, Retail Investors cannot engage in after-hours trading. It is likely that

2 this increase in short volume is the result of institutional investors, like the Fund Defendants, taking

3 new short positions.

4 134. The dramatic increase in short positions was counterintuitive. Chatter in various

5 financial discussion forums indicated high excitement and motivation on the part of Retail Investors to

6 continue investing in the Relevant Securities. Many Retail Investors announced plans to increase

7 positions in the Relevant Securities on January 28, 2021, which would mean the prices for the Relevant

8 Securities were likely to go further up, not down.

9 The Events of January 28, 2021

10 135. As the markets opened on January 28, 2021, the Retail Investors woke up to find that the

11 Brokerage Defendants and other unnamed brokerages had suddenly and without notice restricted their

12 ability to buy long positions in the Relevant Securities. Pursuant to the anticompetitive scheme, the

13 Brokerage Defendants implemented these changes on or about the same time. It would not have been in

14 their economic interest to do so, but for the illegal conspiracy.

15 136. Retail Investors that used Robinhood as their brokerage could no longer click on the

16 “buy” option for any of the Relevant Securities. The “buy” button was deactivated as a feature, leaving

17 users with no option but to sell their securities.

18 137. Defendant Robinhood addressed the “Why don’t I see a buy button?” question on its

19 website here: https://robinhood.com/us/en/support/articles/why-dont-i-see-a-buy-button/. It offers

20 three reasons for the buy button being unavailable on a user’s account. The three reasons are: a) “It’s a

21 foreign stock, which we don’t support.” b) “It’s an over-the-counter (OTC) stock or a warrant, which

22 Robinhood generally doesn’t support.” c) “It’s a stock undergoing corporate action. The stock will be

23 tradable again once the corporate action has been finalized.” Defendant Robinhood’s explanations made

24 little sense, however, because the Relevant Securities were not foreign stocks, OTC stocks or stocks

25 undergoing corporate actions during the Class Period. Robinhood does not warn users of any situation

26 where it could prevent users from buying stock out of its own volition. This explanation was incomplete

27 and untrue and did not disclose the conspiracy underlying the change.

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27 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 31 of 53

1 138. Retail Investors who had queued purchase orders overnight on January 27, 2021 to

2 purchase stock when the markets opened on January 28, 2021 discovered that their purchase orders had

3 been cancelled without their consent. Some received messages that claimed “You canceled your order”

4 despite having never having affirmatively done so.

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17 139. The restrictions on trading took different forms but had the same effect. Retail Investors
18 were prohibited from opening new long positions in the Relevant Securities. In other words, Retail
19 Investors were not permitted to purchase new positions but only permitted to sell their long positions
20 but not buy more.
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 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 32 of 53

1 140. On Defendant Robinhood’s web platform and mobile app, Retail Investors were blocked

2 from searching for the Relevant Securities in Robinhood’s app. In fact, their respective ticker symbols

3 were not even searchable by Retail Investors. The market was essentially shut down with the purpose of

4 benefitting the participants in the conspiracy and with the intent to harm Plaintiffs and the members of

5 the Class.

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20 141. Defendant Stash prohibited users from viewing tickers for the Relevant Securities, and

21 the pages only displayed loading graphics. Other tickers were under no such restriction and were easily

22 searchable on the platform. Because of the Stash platform’s design, a Retail Investor who cannot view

23 the page for a particular asset cannot trade in that asset. As a result, Retail Investors were unable to

24 access the page for the Relevant Securities to open new long positions in the Relevant Securities.

25 142. While there had been reports of increasing government attention from the SEC and even

26 the administration in relation to these rapidly increasing prices of the Relevant Securities, there was no

27 formal governmental guidance issued to restrict trading in these stocks in advance of January 28, 2021.

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29 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 33 of 53

1 143. Reporting throughout January 28, 2021, revealed that the ban on purchasing stock of the

2 Relevant Securities was widespread among brokerages. On information and belief, the Brokerage

3 Defendants adopted similar if not identical restrictions to Retail Investors from opening new positions in

4 all, or at least one or more of the Relevant Securities. It is unlikely that they would have done so, but for

5 the conspiratorial agreement. The market was essentially shut down with the purpose of benefitting the

6 participants in the conspiracy and with the intent to harm Plaintiffs and the members of the Class.

7 144. Pursuant to the illegal anticompetitive scheme, the coordinated prohibition on buying

8 any new Relevant Securities—through the Brokerage Defendants’ forced foreclosure on Retail Investors

9 from buying Relevant Securities—led to a massive sell-off. This resulted in a steep decline in the stock

10 prices for the Relevant Securities.

11 145. For example, on January 28, 2021, Gamestop’s stock fell 44.11% and closed at $193.60

12 per share. Retail Investors who wanted to take advantage of the price drop to buy more stock were

13 unable to due to the coordinated ban on purchasing.

14 146. The prohibition on purchasing stock did not apply to all investors. Large investment

15 firms such as the Fund Defendants faced no restrictions to purchasing the Relevant Securities. Whereas

16 Retail Investors were excluded from purchasing securities at the reduced rate. Investment firms holding

17 short positions were permitted to cover their short positions by buying securities at the artificially

18 reduced price.

19 147. The coordinated prohibition on purchasing placed on Retail Investors quickly resulted in

20 scrutiny from journalists and lawmakers. Defendant Robinhood in particular drew criticism from

21 lawmakers on both sides of the aisle, including calls for congressional and DOJ investigation.

22 148. In response to the events of January 28, 2021, the SEC issued a formal letter that it was

23 investigating the situation on January 29, 2021.

24 149. Robinhood’s conflict-ridden relationship with the Fund Defendants quickly came to

25 light. In addition to its financial interest in Defendant Melvin Capital, it was revealed that Defendant

26 Citadel regularly worked closely with Defendant Robinhood, serving as Defendant Robinhood’s market

27 maker over 60% of the time.

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 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 34 of 53

1 150. Defendant Citadel also pays Defendant Robinhood for order flow. Payment for order

2 flow is a kickback that a brokerage firm receives for directing orders to third party-market makers, like

3 Citadel, for trade execution.

4 151. Reporting revealed that Defendant Citadel had “reloaded” their short positions before

5 instructing Defendant Robinhood to prohibit the purchases of Gamestop and other stocks.

6 152. Employees of the Brokerage Defendants began to emerge as whistleblowers in online

7 forums. A purported Robinhood employee reported on Reddit that Robinhood’s founder and other c-

8 level executives had received calls from Defendant Sequoia Capital pressuring Robinhood into

9 restricting trading in one or more of the Relevant Securities.

10 153. Other brokerage firms took other overt acts in furtherance of the anticompetitive

11 scheme. Certain brokerages sold off long positions in stocks without the permission of the investor.

12 154. The Verge reported that several Retail Investors reported that they had purchased and

13 filled orders of GME and AMC on Robinhood, but discovered that the stock had been sold without their

14 permission on January 28, 2021. Another Retail Investor reported that a purchase of Naked Brand stock

15 (NAKD) had been filled but subsequently sold without their consent. While Robinhood had warned

16 investors that it may automatically sell off option contracts or assets purchased on margin, these

17 investors denied that they had purchased stocks on margin and did not purchase option contracts.

18 These Retail Investors had purchased cash positions in the Relevant Securities that were sold off

19 without their consent.

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 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 35 of 53

1 155. Defendants were aware that they were colluding to manipulate the market. In an

2 interview given by Defendant Interactive Brokers’ chairman Thomas Peterffy, Mr. Peterffy admitted

3 that Interactive Brokers had restricted trading in order to “protect ourselves.”

4 156. The anticompetitive conspiracy was authorized, ordered or performed by the

5 Defendants’ respective officers, agents, employees, representatives, or shareholders while actively

6 engaged in the management, direction, or control of the Defendants’ businesses or affairs.

7 157. At least 18 brokerages together prohibited Retail Investors from opening new positions

8 in GME, AMC and other Relevant Securities on January 28, 2021. Some restricted Retailer Investors

9 from opening new long positions in securities wholesale, whereas others restricted purchasing options

10 only. No brokerages restricted selling of Relevant Securities by any investor, whether by a retail investor

11 or large institutional investor.

12 158. Not all brokerages banned the purchase of the Relevant Securities. Even in the cases

13 where brokerages were allowing Retail Investors to open new long positions, however, the

14 Clearinghouse Defendants began to raise fees to purchase securities or otherwise instruct brokerages to

15 not consummate purchase orders.

16 159. Brokerages route trades through clearinghouses which streamlines the trading process.

17 Some brokerages, such as Defendant Robinhood, serve as their own clearinghouse. By increasing fees to

18 purchase a particular stock, the clearinghouse can suppress the amount of purchases of that stock and

19 affect the stock’s price.

20 160. The Clearinghouse Defendants raised the fees for consummating purchases of the

21 relevant stocks to the non-conspiring brokerages, further facilitating the Fund Defendants covering of

22 their short positions in furtherance of the conspiracy.

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32 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 36 of 53

1 161. Nondefendant brokerage SoFi momentarily had trading in the Relevant Securities

2 forcibly suspended by Clearinghouse Defendant Apex.

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18 162. SoFi quickly objected to Defendant Apex’s attempt to restrict trading in the Relevant

19 Securities on SoFi’s platform and trading was soon permitted on SoFi without restriction.

20 163. Anthony Denier, the CEO of Defendant Webull Financial LLC, a brokerage which had

21 restricted trading in the Relevant Securities, placed the blame squarely on its clearinghouse, Defendant

22 Apex Clearing, for the restrictions on trading the stocks. According to Denier, the collateral required by

23 Apex for Gamestop increased by 100% and Apex had informed him that Webull needed to shut off the

24 ability to open new positions in certain stocks. Denier further said that the restrictions originated the

25 morning of January 28, 2021 and was informed that Apex was instructed by the Defendant Depository

26 Trust & Clearing Corporation that it was increasing the collateral needed to settle trades for the

27 Relevant Securities.

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1 164. Denier further said that the restrictions originated the morning of January 28, 2021 and

2 was informed that Defendant Apex was instructed by the Defendant Depository Trust & Clearing

3 Corporation that it was increasing the collateral needed to settle trades for stocks such as Gamestop.

4 165. Other brokerages such as Defendants Ally Financial Inc., M1 Finance, Tastyworks, and

5 Public.com also reported that Defendant Apex had halted all opening transactions of Gamestop, AMC

6 and Koss, which they blamed for trading restrictions of the Relevant Securities on their platforms.

7 166. Similarly, Defendant Freetrade blamed Clearinghouse Defendant Barclay’s PLC for its

8 restrictions of the Relevant Securities on its platform.

9 167. Defendant Trading212 uses Defendant Interactive Brokers as its intermediary and said

10 Defendant Interactive Brokers was at fault for Defendant Freetrade’s restrictions on the Relevant

11 Securities.

12 168. Defendants’ conspiratorial acts resulted in lockstep price movements of the Relevant

13 Securities that can only be explained by coordinated lockstep actions by Defendants, in particular when

14 considering Retail Investors were only permitted to sell positions in the Relevant Securities.

15 169. As demonstrated by the charts below, the stock prices of the Relevant Securities moved

16 almost in parallel with each other throughout January 28, 2021. The charts revealed a coordinated rise

17 in the prices of the Relevant Securities at approximately 11:00-11:30 a.m. after the Relevant Securities

18 took a steep dive after the markets opened. At that time, few if any Retail Investors were permitted to

19 purchase positions in the Relevant Securities and only institutional investors such as the Fund

20 Defendants were permitted to purchase.

21 //

22 //

23 //

24 //

25 //

26 //

27 //

28 //

34 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 38 of 53

10

11

12

13

14 The Anticompetitive Scheme is Ongoing

15 170. Even in the face of increased scrutiny, Defendants continued their anticompetitive
16 scheme to suppress the price of the Relevant Securities.
17 171. Partly as a result of criticism, the Brokerage Defendants nearly all permitted Retail
18 Investors to open new long positions in the Relevant Securities as the market opened on January 29,
19 2021.
20 //
21 //
22 //
23 //
24 //
25 //
26 //
27 //
28 //

35 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 39 of 53

1 172. Defendant Freetrade, a brokerage based in the United Kingdom, citing concerns from its

2 foreign exchange provider, restricted trades in United States securities altogether on January 29, 2021,

3 after restricting purchases on January 28, 2021.

10

11

12 173. While purchases were permitted, they were heavily restricted by the Brokerage

13 Defendants. Nevertheless, Retail Investors, still believing in the value of these assets, continued to

14 purchase stock in the Relevant Securities once they were permitted to.

15 174. Many of the Brokerage Defendants restricted trading of long option contracts and

16 announced to Retail Investors they would close out their profitable option positions automatically.

17

18

19

20

21

22

23

24

25

26

27

28

36 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 40 of 53

1 175. The Relevant Securities began to regain the value lost the prior day as a result of

2 Defendants’ coordinated action to suppress the value of the stocks.

3 176. Because the Fund Defendants and other unnamed conspirators still had distressed short

4 positions outstanding, this threatened their ill-gotten gains achieved the day before.

5 177. Defendant Robinhood limited users to purchasing a limited amount of stock. With

6 respect to Gamestop, for example, Defendant Robinhood first restricted Retail Investors to purchasing

7 only five shares of Gamestop, which resulted in a rapid decline in the value of Gamestop. As

8 Gamestop’s stock price recovered, Defendant Robinhood further limited purchases to two shares.

10

11

12

13

14

15 178. When the value of Gamestop again began to recover, Defendant Robinhood later

16 instituted a one share limit to acquisitions of Gamestop, further causing the value of Gamestop to

17 decrease.

18
179. Brokerage Defendants instituted similar restrictions as to other Relevant Securities.
19

20

21

22

23

24

25

26

27

28

37 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 41 of 53

1 180. Each artificial limitation in the amount of securities a Retail Investor could purchase

2 correlated with a subsequent decrease in stock value. As purchases of the Relevant Securities were

3 limited, more investors were pressured to sell who otherwise would not have in the presence of a free

4 and open market.

10

11

12

13

14

15

16

17 181. The extent and scope of the conspiracy is still as of yet unknown. Plaintiffs believe the

18 anticompetitive scheme is ongoing. In the evening of January 29, 2021, Defendant Robinhood

19 announced it was increasing the number of restricted stocks from 13 to 50. On January 30, 2021, Reuters

20 reported that Defendant IG Group was continuing to suspend trading in the Relevant Securities.

21 CLAIMS FOR RELIEF

22 COUNT ONE

23 CONSPIRACY TO RESTRAIN TRADE

IN VIOLATIONOF SECTION 1 OF THE SHERMAN ACT,
24 15 U.S.C. § 1
(Against all Defendants)
25

26 182. Plaintiffs hereby incorporate by reference the factual allegations as set forth above.
27 183. On information and belief, the Defendants conspired and entered into an
28 anticompetitive scheme to fix, raise, stabilize, maintain or suppress the price of the Relevant Securities.

38 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 42 of 53

1 184. Faced with potentially disastrous losses due to their illegal short position, the Fund

2 Defendants, rather than engage in competition, conspired, combined, agreed and colluded with the

3 Brokerage Defendants and Clearinghouse Defendants to restrict purchases in stocks by retailer investors

4 and to manipulate and artificially suppress the price of stock, through which they could cover their short

5 positions.

6 185. Defendants conspired and agreed with one another with the intent to artificially lower

7 the price of the relevant stocks.

8 186. Defendants coordinated a collective shutdown of the stock brokerage market with

9 respect to the Relevant Securities, prohibiting market participants with the exception of the Fund

10 Defendants from purchasing stock in the Relevant Securities. Pursuant to the conspiracy, the restriction

11 of stock purchases resulted in a sell-off of stocks, driving down prices in the Relevant Securities to levels

12 that would not have been obtained, but for the conspiracy, combination, agreement and restraint of

13 trade.

14 187. In furtherance of the conspiracy, combination, agreement and restraint of trade, on

15 January 27, 2021, after the close of the stock market and before the open of the market the next day, the

16 Fund Defendants coordinated and planned increased short volumes in anticipation of short calls on

17 January 28, 2021.

18 188. In furtherance of the conspiracy, combination, agreement and restraint of trade, the

19 Brokerage Defendants have prohibited, continue to prohibit, or unreasonably restrict the purchases of

20 shares of the Relevant Securities by Plaintiffs in restraint of trade.

21 189. As a direct and intended result of Defendants contract, combination, agreement and

22 restraint of trade or conspiracy, Defendants caused injury to Plaintiffs by restricting purchases of

23 Relevant Securities. The Brokerage Defendants deactivated the buy option on their platforms and left

24 Plaintiffs with no option but to sell shares of the stocks on their platforms. Plaintiffs and Class members,

25 faced with an imminent decrease in the price of their positions in the Relevant Securities due to the

26 inability of Retail Investors to purchase shares, were induced to sell their shares in the Relevant

27 Securities at a lower price than they otherwise would have, but for the conspiracy, combination,

28

39 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 43 of 53

1 agreement and restraint of trade. Additionally, Class members that would have purchased more stock in

2 the Relevant Securities given the upward trend in price could not do so.

3 190. Pursuant to the contract, combination, agreement, conspiracy and restraint of trade, the

4 Brokerage Defendants permitted the Fund Defendants to purchase stocks at the artificially deflated

5 prices. The Fund Defendants, who were in exposed short positions due to the short squeeze, purchased

6 the artificially price-suppressed stocks to cover their short positions.

7 191. Not all brokerages joined in the anticompetitive scheme with the Brokerage Defendants.

8 To induce compliance and to limit the effects non-complying brokerages could have in disrupting

9 Defendants’ anticompetitive scheme, the Clearinghouse Defendants raised the fees and/or removed the

10 ability to fill purchases of the Relevant Securities to the non-conspiring brokerages, further facilitating

11 the Fund Defendants covering of their short positions in furtherance of the conspiracy.

12 192. Defendants’ anticompetitive and unlawful conduct is per se illegal.

13 193. As a direct and proximate result of Defendants’ unlawful conduct, Plaintiffs and Class

14 members were injured in their business and property.

15 194. Plaintiffs and the Class further seek equitable and injunctive relief pursuant to Section 16

16 of the Clayton Act, 15 U.S.C. § 26, and other applicable law, to correct the anticompetitive effects

17 caused by Defendants’ unlawful conduct.

18 COUNT TWO

19 CONSPIRACY TO RESTRAIN TRADE

IN VIOLATION OF THE CALIFORNIA CARTWRIGHT ACT,
20 CAL. BUS. & PROF. CODE § 16700 et seq.
(Against all Defendants)
21

22 195. Plaintiffs hereby incorporate by reference the factual allegations as set forth above.
23 196. On information and belief, the Defendants and their conspirators entered into an
24 unlawful agreement and engaged in a continuing unlawful trust in restraint of trade and commerce as
25 described herein in violation of California Business and Professions Code § 16720 to fix, stabilize,
26 maintain or suppress the price of the Relevant Securities.
27 197. Faced with potentially disastrous losses due to their illegal short position, the Fund
28 Defendants, rather than engage in competition, conspired, combined, agreed and colluded with the

40 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 44 of 53

1 Brokerage Defendants and Clearinghouse Defendants to restrict purchases in stocks by retailer investors

2 and to manipulate and artificially suppress the price of stock, through which they could cover their short

3 positions.

4 198. Defendants conspired and agreed with one another with the intent to artificially lower

5 the price of the Relevant Securities. Defendants agreed to pool, combine or directly or indirectly unite

6 their interests such that the price of the Relevant Securities would be fixed, stabilized, maintained,

7 suppressed.

8 199. Defendants coordinated a collective shutdown of the stock brokerage market with

9 respect to the Relevant Securities prohibiting market participants with the exception of the Fund

10 Defendants from purchasing stock in the Relevant Securities. Pursuant to the conspiracy, the restriction

11 of stock purchases resulted in a sell-off of stocks, driving down prices in the Relevant Securities to levels

12 that would not have been obtained, but for the conspiracy, combination, agreement and restraint of

13 trade.

14 200. In furtherance of the unlawful trust and restraint of trade, on January 27, 2021, after the

15 close of the stock market and before the open of the market the next day, the Fund Defendants

16 coordinated and planned increased short volumes in anticipation of short calls on January 28, 2021.

17 201. In furtherance of the unlawful trust and restraint of trade, the Brokerage Defendants

18 have prohibited, restricted, and continue to prohibit and unreasonably restrict the purchases of shares of

19 the Relevant Securities by Plaintiffs in restraint of trade.

20 202. As a direct and intended result of Defendants’ unlawful trust and restraint of trade,

21 Defendants caused injury to Plaintiffs by restricting purchases and sales of shares Relevant Securities.

22 The Brokerage Defendants deactivated the buy option on their platforms and left Plaintiffs with no

23 option but to sell shares of the stocks on their platforms. Plaintiffs and Class members, faced with an

24 imminent decrease in the price of their positions in the Relevant Securities due to the inability of Retail

25 Investors to purchase shares, were induced to sell their shares in the Relevant Securities at a lower price

26 than they otherwise would have, but for the conspiracy, combination, agreement and restraint of trade.

27 Additionally, Class members that would have purchased more stock in the Relevant Securities given the

28 upward trend in price could not do so.

41 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 45 of 53

1 203. Pursuant to the unlawful trust and restraint of trade, the Brokerage Defendants

2 permitted the Fund Defendants to purchase stocks at the artificially deflated prices. The Fund

3 Defendants, who were in exposed short positions due to the short squeeze, purchased the artificially

4 price-suppressed stocks to cover their short positions.

5 204. Not all brokerages joined in the anticompetitive scheme with the Brokerage Defendants.

6 To induce compliance and to limit the effects non-complying brokerages could have in disrupting

7 Defendants’ anticompetitive scheme, the Clearinghouse Defendants raised the fees for consummating

8 purchases of the relevant stocks to the non-conspiring brokerages, further facilitating the Fund

9 Defendants covering of their short positions in furtherance of the conspiracy.

10 205. As a direct and proximate result of Defendants’ unlawful conduct, Plaintiffs and Class

11 members were injured in their business and property.

12 206. Plaintiffs and the Class seek treble damages and their cost of suit, including attorneys’

13 fee, equitable and injunctive relief pursuant to California Business and Professions Code § 16750(a), and

14 other applicable law, to correct the anticompetitive effects caused by Defendants’ unlawful conduct.

15 COUNT THREE

16 UNFAIR COMPETITION IN VIOLATION OF CALIFORNIA

BUSINESS AND PROFESSIONS CODE § 17200 et seq.
17 (Against All Defendants)
18

19 207. Plaintiffs hereby repeat and incorporate by reference each preceding and succeeding

20 paragraph as though fully set forth herein.

21 208. The California Unfair Competition Law (“UCL”) codified at California Business and

22 Professions Code § 17200 et seq. prohibits any unlawful, unfair or fraudulent business practices and

23 unfair, deceptive, untrue or misleading advertisement.

24 209. Under California Business and Professions Code § 17200 et seq., a business act or

25 practice is “unlawful” if it violates any established state or federal law.

26 210. Defendants engaged in an unlawful contract, combination or conspiracy in the restraint

27 of trade to artificially suppress the stock price of the Relevant Securities.

28

42 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 46 of 53

1 211. Brokerage Defendants violated the UCL by engaging in unlawful, unfair, and fraudulent

2 business acts or practices in furtherance of the conspiracy, including but not limited to: (a) knowingly

3 and intentionally prohibiting Retailer Investors from purchasing any Relevant Securities; (b) forcing

4 Retail Investors to sell their Relevant Securities by deactivating several features on their platforms; and

5 (c) selling Retail Investors’ Relevant Securities without their consent.

6 212. The Clearinghouse Defendants violated the UCL by engaging in unlawful, unfair, and

7 fraudulent business acts or practices in furtherance of the conspiracy by increasing fees and inducing

8 brokerages to restrict trading in the Relevant Securities to Retail Investors.

9 213. The Fund Defendants, by engaging in unlawful, unfair, and fraudulent business acts or

10 practices in furtherance of the conspiracy by directing the Brokerage Defendants and Clearinghouse

11 Defendants to restrict trading in the Relevant Securities to Retail Investors in order to artificially

12 suppress the share price of the Relevant Securities.

13 214. Defendants engaged in and continue to engage in exclusionary, anticompetitive conduct

14 that is deleterious to consumers and to the benefit of Defendants.

15 COUNT FOUR

16 DISSEMINATION OF UNTRUE AND MISLEADING PUBLIC

STATEMENTS IN VIOLATION OF CALIFORNIA BUSINESS
17 AND PROFESSIONS CODE § 17500 et seq.
(Against All Defendants)
18

19 215. Plaintiffs hereby repeat and incorporate by reference each preceding and succeeding

20 paragraph as though fully set forth herein.

21 216. Defendants violated the California Business and Professions Code § 17500 et seq. by

22 making or disseminating, or causing to be made or disseminated, before the public, untrue or misleading

23 statements in connection with the sale of goods or services, that Defendants knew or should have

24 known were untrue or misleading, including but not limited to statements concerning the reliability,

25 fairness, and accuracy of the value of the Relevant Securities, and continue to do so with the intent to

26 induce the Retail Investors to sell their shares of the Relevant Securities at artificially suppressed prices.

27 217. Brokerage Defendants executed trades on their customers’ behalves without their

28 consent and made false and misleading statements regarding the reasons for executing such trades.

43 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 47 of 53

1 218. Fund Defendants made misstatements about their role in the conspiracy to the public.

2 219. Clearinghouse Defendants made misleading statements to the public about their

3 involvement in the conspiracy while demanding significantly more collateral from member brokers to

4 facilitate the conspiracy.

5 COUNT FIVE

6 BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

(Against the Brokerage Defendants)
7

8 220. Plaintiffs hereby repeat and incorporate by reference each preceding and succeeding

9 paragraph as though fully set forth herein.

10 221. Plaintiffs and members of the Class entered into agreements with the Brokerage

11 Defendants. They agreed to Brokerage Defendants’ Terms and Conditions by using the Brokerage

12 Defendants’ websites, apps and trading platforms.

13 222. Plaintiffs and members of the Class fulfilled and performed their obligations under these

14 contracts by adhering to their terms and using Brokerage Defendants’ trading services through its

15 website and trading platform.

16 223. The Brokerage Defendants made the implied promise that they would not do anything to

17 unfairly interfere with the rights of any other party to receive the benefits of the contract.

18 224. The Brokerage Defendants did not act in good faith or with honesty of purpose. To the

19 contrary, they acted with the intention of misleading or taking unfair advantage of plaintiffs and the

20 Class. The Brokerage Defendants was obligated to provide the trading services required under those

21 contracts at all times, including but not limited to, trades for Relevant Securities.

22 225. When initially signing up to use the Brokerage Defendants’ websites, apps and trading

23 platforms, Plaintiffs and all those similarly situated could and actually did trade in the Relevant

24 Securities.

25 226. The Brokerage Defendants unfairly interfered with the rights of Plaintiffs to receive the

26 benefits of the agreements by, among other things: (i) failing to provide services necessary to carry out a

27 trade; (ii) failing to provide certain trading services whatsoever; (iii) failing to inform individuals in a

28 timely member of the drastic changes in trading abilities; and (iv) prohibiting plaintiffs from buying

44 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 48 of 53

1 Relevant Securities for the Brokerage Defendants own interest and not disclosing those interest to

2 Plaintiffs and all Class members.

3 227. The Brokerage Defendants’ conduct has caused Plaintiffs and members of the Class

4 harm, losses, and damages.

5 COUNT SIX

6 NEGLIGENCE
(Against the Brokerage Defendants)
7

8 228. Plaintiffs hereby repeat and incorporate by reference each preceding and succeeding

9 paragraph as though fully set forth herein.

10 229. The Brokerage Defendants had a common law duty to exercise reasonable care in

11 conducting and facilitating transactions for its customers.

12 230. The Brokerage Defendants had a common law duty to exercise reasonable care in

13 providing trades on the free and open market for its customers.

14 231. The Brokerage Defendants unlawfully breached their duties by, among other things, (i)

15 removing the Relevant Securities without notice from their websites, apps and trading platforms; (ii)

16 failing to provide financial services related to Relevant Securities; and (iii) failing to notify Retail

17 Investors in a timely manner of the prohibition in purchasing of the Relevant Securities.

18 232. The Brokerage Defendants’ conduct departed from the ordinary standard of care

19 expected of a stockbroker. If volatility was truly a concern, trading entirely should have been halted in

20 the Relevant Securities. Instead, the Brokerage Defendants permitted Retail Investors to only sell their

21 positions in the Relevant Securities. Further, non-Retail Investors were permitted to trade in the

22 Relevant Securities without restriction.

23 233. The Brokerage Defendants breached their duty of care to the Retail Investors by

24 selectively restricting purchases of Relevant Securities to the Retail Investors who wanted to purchase

25 more stock in the Relevant Securities.

26 234. Brokerage Defendants negligent and wrongful breaches of its duties owed to Plaintiffs

27 and Class members proximately caused losses and damages that would not have occurred but for the

28 Brokerage Defendants’ gross breach of their duty of care.

45 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 49 of 53

1 235. Plaintiffs and Class members suffered actual injury as a result of Brokerage Defendants’

2 breach of their duty.

3 236. Plaintiffs and Class members’ injury was proximately and directly caused by Brokerage

4 Defendants breach of their duty.

5 COUNT SEVEN

6 NEGLIGENCE PER SE
(Against Brokerage Defendants)
7

8 237. Plaintiffs hereby repeat and incorporate by reference each preceding and succeeding

9 paragraph as though fully set forth herein.

10 238. The Brokerage Defendants had a statutory duty to exercise reasonable care in

11 conducting and facilitating transactions for its customers.

12 239. The Brokerage Defendants had a statutory duty to exercise reasonable care in providing

13 trades on the free and open market for its customers.

14 240. The Brokerage Defendants unlawfully breached their duties by, among other things, (i)

15 removing the Relevant Securities without notice from their websites, apps and trading platforms; (ii)

16 failing to provide financial services related to Relevant Securities; and (iii) failing to notify Retail

17 Investors in a timely manner of the prohibition in purchasing of the Relevant Securities.

18 241. The Brokerage Defendants’ conduct departed from the ordinary standard of care

19 expected of a stockbroker. If volatility was truly a concern, trading entirely should have been halted in

20 the Relevant Securities. Instead, the Brokerage Defendants permitted Retail Investors to only sell their

21 positions in the Relevant Securities. Further, non-Retail Investors were permitted to trade in the

22 Relevant Securities without restriction.

23 242. The Brokerage Defendants breached its duty of care by selectively restricting purchases

24 of Relevant Securities to the Retail Investors who wanted to purchase more stock in the Relevant

25 Securities.

26 243. The Brokerage Defendants’ negligent and wrongful breaches of the duties owed to

27 Plaintiffs and Class members proximately caused losses and damages that would not have occurred but

28 for the Brokerage Defendants’ gross breach of their duty of care.

46 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 50 of 53

1 244. Plaintiffs and Class members suffered actual injury as a result of Brokerage Defendants’

2 breach of their duty.

3 245. Plaintiffs and Class members’ injury was proximately and directly caused by Brokerage

4 Defendants’ breach of their duties.

5 COUNT EIGHT

6 BREACH OF FIDUCIARY DUTY

(Against Brokerage Defendants)
7

8 246. Plaintiffs hereby repeat and incorporate by reference each preceding and succeeding
9 paragraph as though fully set forth herein.
10 247. As licensed providers of financial services, the Brokerage Defendants at all relevant
11 times herein were fiduciaries to the Plaintiffs and Class members and owed them the highest good faith
12 and integrity in performing its financial services on their behalf. Each Brokerage Defendant also acted as
13 a fiduciary to each and every customer who agreed to their respective terms and conditions.
14 248. The Brokerage Defendants breached their fiduciary duties to Plaintiff and Class
15 members by, among other things, failing to disclose that its platform was going to remove Relevant
16 Securities purchases in a timely manner; actually removing Relevant Securities; removing Relevant
17 Securities for their own pecuniary benefits; misrepresenting and omitting material information; that the
18 Brokerage Defendants failed to provide access to its financial services in a timely manner; that
19 Brokerage Defendants failed to comply with all applicable legal, regulatory, and licensing requirements;
20 and that Brokerage Defendants failed to exercise trades and actions requested by customers in a
21 complete and timely manner.
22 249. The Brokerage Defendants’ conduct has caused the Plaintiffs and Class members’ harm,
23 losses, and damages and continues to expose them to harm because the Brokerage Defendants continue
24 to breach their fiduciary duties.
25

26

27

28

47 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 51 of 53

1 COUNT NINE

2 CONSTRUCTIVE FRAUD
(Against Brokerage Defendants)
3

4 250. Plaintiffs hereby repeat and incorporate by reference each preceding and succeeding

5 paragraph as though fully set forth herein.

6 251. The Brokerage Defendants had a duty to exercise reasonable care in conducting and

7 facilitating securities transactions for its customers.

8 252. The Brokerage Defendants owed the Plaintiffs and Class members a fiduciary duty to

9 fully disclose material facts as relates to their brokerage relationship.

10 253. The Brokerage Defendants represented to Plaintiffs and Class members that they were

11 brokerage services offering free and fair trading in the stock market.

12 254. Plaintiffs and Class members chose to use the Brokerage Defendants websites, apps and

13 trading platforms in part due to assurances that they would be able to trade on the stock market.

14 255. The Brokerage Defendants subsequently and selective restricted and limited the

15 securities that Plaintiffs and Class members were able to buy on their websites, apps and trading

16 platforms, contrary to their representations.

17 256. Plaintiffs and Class members’ reliance on the Brokerage Defendants’ false

18 representations were substantial factors in causing Plaintiffs’ harm as they were prohibited from trading

19 freely given the Brokerage Defendants’ restrictions.

20 PRAYER FOR JUDGMENT

21 WHEREFORE, Plaintiffs request that the Court enter judgment on their behalf and on behalf

22 of the Class defined herein, by adjudging and decreeing that:

23 257. This action may proceed as a class action, with Plaintiffs serving as Class

24 Representatives, and with Plaintiffs’ counsel as Class Counsel;

25 258. Defendants have contracted, combined, and conspired in violation of Section 1 of the

26 Sherman Act, 15 U.S.C. § 1, and that Plaintiffs and the Class have been injured in their business and

27 property as a result of Defendants’ violations;

28

48 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 52 of 53

1 259. Plaintiffs and the Class are entitled to pre-judgment and post-judgment interest on the

2 damages awarded them, and that such interest be awarded at the highest legal rate from and after the

3 date this class action complaint is first served on Defendants;

4 260. Defendants are to be jointly and severally responsible financially for the costs and

5 expenses of a Court-approved notice program through post and media designed to give immediate

6 notification to the Class;

7 261. Plaintiffs and the Class recover their costs of this suit, including reasonable attorneys’

8 fees as provided by law;

9 262. Plaintiffs and the Class are entitled to equitable relief appropriate to remedy Defendants’

10 past and ongoing restraint of trade, including:

11 a. A judicial determination declaring the rights of Plaintiffs and the Class, and the

12 corresponding responsibilities of Defendants;

13 b. Issuance of a permanent injunction against Defendants and their parents,

14 subsidiaries, affiliates, successors, transferees, assignees and the respective officers,

15 directors, partners, agents, and employees thereof and all other persons acting or

16 claiming to act on their behalf from continuing and maintaining the conspiracy or

17 agreements herein;

18 c. A constructive trust over any ill-gotten property or assets, including but not

19 limited to stocks in the Relevant Securities received as a result of the conspiracy or

20 agreement or other wrongful conduct as alleged herein;

21 263. Plaintiffs and the Class receive such other or further relief as may be just and proper.

22 //

23 //

24 //

25 //

26 //

27 //

28 //

49 CLASS ACTION COMPLAINT

 Case 3:21-cv-00781-SK Document 1 Filed 02/01/21 Page 53 of 53

1 JURY TRIAL DEMANDED

2 Pursuant to Federal Rule of Civil Procedure 38(b), Plaintiffs demand a trial by jury of all the

3 claims asserted in this Complaint so triable.

4 Dated: February 1, 2021 By: /s/ Joseph R. Saveri

Joseph R. Saveri
5

6 Joseph R. Saveri (State Bar No. 130064)

Steven N. Williams (State Bar No. 175489)
7 Christopher K.L. Young (State Bar No. 318371)
Anupama K. Reddy (State Bar No. 324873)
8 JOSEPH SAVERI LAW FIRM, INC.
601 California Street, Suite 1000
9 San Francisco, California 94108
Telephone: (415) 500-6800
10 Facsimile: (415) 395-9940
Email: jsaveri@saverilawfirm.com
11 swilliams@saverilawfirm.com
cyoung@saverilawfirm.com
12 areddy@saverilawfirm.com
13 Counsel for Individual and Representative Plaintiffs
Shane Cheng and Terell Sterling
14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

50 CLASS ACTION COMPLAINT

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