Robinhood $9.9M Settlement: Outage Litigation Explained

Introduction

The proposed settlement in the class action lawsuit In re Robinhood Outage Litigation, No. 3:320-cv-01626-JD has been reached between Plaintiffs and Class Representatives (“Plaintiffs”) and Robinhood Markets, Inc., Robinhood Financial LLC and Robinhood Securities, LLC. (“Robinhood”). The Settlement involves claims related to certain alleged trading losses in connection with outages to Robinhood’s trading platform on March 2-3, 2020 and March 9, 2020 (the “Outages”). Under the proposed Settlement, Robinhood will pay $9,900,000 to settle these claims.

Breaking Down the Settlement Amount

The total settlement amount is $9,900,000. This sum will be divided among all eligible Settlement Class Members after paying for settlement administration costs, attorney's fees and expenses awarded by the Court to Class Counsel as well as any Service Awards ordered by the Court.

• Attorney's fees are not expected to exceed 30% of the total settlement amount ($2,970,000).
• Expense reimbursement for attorneys is estimated at a maximum of $1,120,000.
• Settlement administration costs should not surpass $225,000.
• Service Awards for Plaintiffs are projected at no more than $37,500 in total ($2,500 per Plaintiff).

What Are The Important Dates To Remember?

In order to fully understand one's rights and options regarding this proposed settlement, it is crucial to be aware of several important dates:

• May 1,2023: Deadline to file an objection or exclude oneself from the Settlement.
• June 15,2023: Fairness Hearing date at which the Court will decide whether to approve the Settlement and consider any objections raised.

Please note that these dates and deadlines are subject to change without further notice. It is advised to check the official settlement website or the Court’s Public Access to Court Electronic Records (PACER) website for any updates on these dates.

Who Are The Class Members?

The Settlement Class Members include Robinhood accountholders in the United States who engaged in one of the following three (3) categories of Qualifying Trades during the Outages:

1. VWAP Loss Trades: This group includes any person who closed one or more position(s) on March 3, 2020, at a loss relative to the Volume Weighted Average Price “(VWAP)” of those positions during the March 2 and 3, 2020 Outages.
2. SPY Options Trades: This group includes any person who held a SPDR S&P 500 (“SPY”) option position expiring on March 2, 2020 and experienced a loss relative to the VWAP of those options during the March 2, 2020 Outage.
3. Failed Marketable Trades: This group includes any person who experienced a Failed Equity Trade that became marketable during either of these timeframes:

• The March 2 and3 Outages at a loss relative to:
• The price atthe end ofthe March2 and3 Outages;
• The transaction price obtained through March4,2020;
• The March 9 Outage at a loss relative to:
• The price atthe end ofthe March9 Outage;
• The transaction price obtained through March10,2020.

A “Failed Equity Trade” is defined as an order to buy or sell equities that was accepted into Robinhood’s system and became marketable but failed to execute during the Outages. Only the Qualifying Trades identified are eligible for payment in this Settlement.

What Can Class Members Expect To Receive?

Each eligible Settlement Class Member may receive a Settlement Payment from the Net Settlement Fund, which will be subject to a pro rata adjustment relative to the estimated Net Settlement Fund. The objective of the Plan of Allocation is to equitably distribute these funds among Settlement Class Members who engaged in Qualifying Trades based on their respective alleged economic losses under Plaintiffs’ damages theories.

In order to receive a Settlement Payment, one must have experienced a monetary loss under Plaintiffs’ damages theories in connection with the Qualifying Trades described above and greater than any Goodwill Program Credit already received from Robinhood. If you did not engage in a Qualifying Trade, your legal rights are not affected by this proposed settlement.