Complaint - M Cinema LLC v. Silver Cinemas Acquisition Co., 342 F. Supp. 3d 126 (2022-03-11)

Date: 2022-03-11

Full text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO. 21-2989-MDL-ALTONAGA/Torres

IN RE:

JANUARY 2021 SHORT SQUEEZE
TRADING LITIGATION
____________________________________/

This Document Relates to:

ALL ANTITRUST ACTIONS

ANTITRUST PLAINTIFFS’ OPPOSITION TO
DEFENDANTS’ MOTION TO DISMISS THE AMENDED COMPLAINT
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 1 of 47

TABLE OF CONTENTS
Page(s)
I.
INTRODUCTION .............................................................................................................. 1
II.
FACTUAL BACKGROUND ............................................................................................. 2
A.
The January 2021 Short Squeeze ............................................................................ 3
B.
Robinhood’s Unprecedented Trading Restrictions ................................................. 4
III.
STANDARD OF REVIEW ................................................................................................ 4
IV.
ARGUMENT ...................................................................................................................... 5
A.
Plaintiffs Plausibly Allege an Anticompetitive Agreement .................................... 7
i.
Defendants’ Communications and Conduct Support the Inference of a
Conspiracy .................................................................................................. 9
ii.
Defendants’ Pattern of Concealment Infers a Conspiracy ........................ 14
iii.
Additional Circumstantial Evidence of the Scheme ................................. 15
iv.
Defendants’ Proffered Alternative Explanations Create a Factual Dispute
And Do Not Suggest Plaintiffs’ Allegations Are Implausible ................... 18
B.
Plaintiffs Plausibly Plead an Unreasonable Restraint on Trade ............................ 21
i.
The Court Should Not Determine at the Motion to Dismiss Stage Whether
to Apply Per Se or Rule of Reason Treatment .......................................... 21
ii.
Alternatively, the Court Should Find that the Agreement Qualifies for Per
Se Treatment.............................................................................................. 22
iii.
Plaintiffs Have Established a Conspiracy Under the “Quick Look”
Approach and the Rule of Reason ............................................................ 23
iv.
Plaintiffs’ allegations suffice under the rule of reason .............................. 24
V.
Plaintiffs’ Claims Are Not Preempted by the Federal Securities’ Law ............................. 32
A.
Dodd-Frank Act’s Antitrust Savings Clause Applies to Plaintiffs’ Claims ........... 32
B.
The Billing Factors Weigh Against Preclusion of Plaintiffs’ Claims .................... 34
i.
The Underlying Conduct at Issue Is Not Central to the Functioning of
Well-Regulated Capital Markets ............................................................... 35
ii.
The SEC Is Not Authorized to Regulate the Activities in Question ......... 36
iii.
The SEC Is Not Exercising its Authority over the Conduct at Issue ........ 37
iv.
There is No Conflict Between Antitrust and Securities Laws .................. 38
VI.
CONCLUSION ................................................................................................................. 40
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 2 of 47

iii

TABLE OF AUTHORITIES

Page(s)
Cases
2301 M Cinema LLC v. Silver Cinemas Acquisition Co., 342 F. Supp. 3d 126
(D.D.C. 2018) ..........................................................................................................................31
Albrecht v. Herald, 390 U.S. 145 (1968) .......................................................................................13
Andrx Pharms., Inc. v. Elan Corp., 421 F.3d 1227 (11th Cir. 2005)...............................................5
Apple, Inc. v. Pepper, 139 S. Ct. 1514 (2019) ...............................................................................27
Ashcroft v. Iqbal, 556 U.S. 662 (2009) ............................................................................................5
Associated News, Inc. v. Curtis Circulation Co., Inc., Civ. A. No. H-80-1201,
1986 WL 13791 (S.D. Tex. Dec. 4, 1986) .................................................................................8
Battle v. Lubrizol Corp., 673 F.2d 984 (8th Cir. 1982) .............................................................7, 23
Belcher v. Atl. Capital Realty, LLC, 2010 WL 11507399 (M.D. Fla. Sep. 17,
2010) ........................................................................................................................................14
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................. passim
In re Blue Cross Blue Shield Antitrust Litig., 26 F. Supp. 3d 1172 (N.D. Ala.
2014) ........................................................................................................................................21
Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717 (1988) ......................................................22
Cal. Dental Ass’n v. Fed. Trade Comm’n, 526 U.S. 756 (1999) .............................................23, 24
ChoiceParts, LLC v. Gen. Motors Corp., 203 F. Supp. 2d 905 (N.D. Ill. 2002) ...........................18
City of Rockford v. Mallinckrodt ARD, Inc., 360 F. Supp. 3d 730 (N.D. Ill. 2019) ..................9, 21
Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962) ..................................1, 7
Costco Wholesale Corp. v. Johnson & Johnson Vision Care, Inc., No. 3:15-cv-
734-J-20JRK, 2015 WL 9987969 (M.D. Fla. Nov. 4, 2015) ........................................... passim
In re Credit Default Swaps Antitrust Litig., No. 13md2476 (DLC), 2014 WL
4379112 (S.D.N.Y. Sept. 4, 2014) ...........................................................................................34
Credit Suisse Securities (USA) LLC v. Billing, 551 U.S. 264 (2007) .................................... passim
Dahl v. Bain Capital Partners, LLC, 589 F. Supp. 2d 112 (D. Mass. 2008) .................................37
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 3 of 47

In re Dealer Mgmt. Sys. Antitrust Litig., MDL 2817, 2022 WL 199271 (N.D. Ill.
Jan. 21, 2022) ...........................................................................................................................15
DeLong Equip Co. v. Wash. Mills Abrasive Co., 887 F.2d 1499 (11th Cir. 1989)..........................7
In re Delta/AirTran Baggage Fee Antitrust Litig., 733 F. Supp. 2d 1348 (N.D. Ga.
2010) ................................................................................................................................8, 9, 18
In re Disposable Contact Lens Antitrust Litig., 215 F. Supp. 3d 1272 (M.D. Fla.
2016) ................................................................................................................................ passim
Elec. Trading Grp., LLC v. Banc of Am. Sec. LLC, 588 F.3d 128 (2d Cir. 2009) ................. passim
In re EpiPen Direct Purchaser Litig., No. 20-cv-0827, 2021 WL 147166 (D.
Minn. Jan. 15, 2021) ................................................................................................................30
In re EpiPen (Epinephrine Injection, USP) Mktg., Sales Pracs., & Antitrust Litig.,
336 F. Supp. 3d 1256 (D. Kan. 2018) ......................................................................................22
Erickson v. Pardus, 551 U.S. 89 (2007) ..........................................................................................4
ES Dev., Inc. v. RWM Enters., Inc., 939 F.2d 547 (8th Cir. 1991) ................................................33
Fed. Trade Comm’n v. Ind. Fed’n of Dentists, 476 U.S. 447 (1986) ......................................28, 29
Geneva Pharms. Tech. Corp. v. Barr Labs. Inc., 386 F.3d 485 (2d Cir. 2004) .............................24
Gordon v. N.Y. Stock Exch., Inc., 422 U.S. 659 (1975) .................................................................34
California ex rel. Harris v. Safeway, Inc., 651 F.3d 1118 (9th Cir. 2011) ....................................23
Helicopter Support Sys. Inc., v. Hughes Helicopter, Inc., 818 F.2d 1530 (11th Cir.
1987) ..........................................................................................................................................8
In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651 (7th Cir. 2002) ...........................17
In re High-Tech Emp. Antitrust Litig., 856 F. Supp. 2d 1103 (N.D. Cal. 2012) .....................21, 22
Hosp. Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738 (1976) .................................................5, 7
Hunter v. Booz Allen Hamilton, Inc., 418 F. Supp. 3d 214 (S.D. Ohio 2019) ...............................21
In re Interest Rate Swaps Antitrust Litig., 261 F. Supp. 3d 430 (S.D.N.Y. 2017).........................34
Interstate Cir., Inc. v. United States, 306 U.S. 208 (1939) ............................................................11
Isaksen v. Vermont Castings, Inc., 825 F.2d 1158 (7th Cir. 1987) ..........................................12, 13
Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698 (7th Cir. 1984) .........................19
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 4 of 47

Jackson v. Wal-Mart Stores, Inc., 753 F. App’x 866 (11th Cir. 2018) ............................................5
Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327 (11th Cir. 2010) .............................2, 25, 28, 29
Kalmanovitz v. G. Heilman Brewing Co., 769 F.2d 152 (3d Cir. 1985) ............................27, 35, 36
Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit., 507
U.S. 163 (1993) ..............................................................................................................5, 25, 27
Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) ....................................21
Lucasys Inc. v. PowerPlan, Inc., No. 20-cv-2987, 2021 WL 5279391 (N.D. Ga.
Sep. 30, 2021) ..........................................................................................................................24
Maris Distrib. Co. v. Anheuser-Busch, Inc., 302 F.3d 1207 (11th Cir. 2002) .........................31, 32
Mayor & City Council of Balt., Md. v. Citigroup, Inc., Nos. 08-cv-7746 (BSJ), 08-
cv-7747 (BSJ), 2010 WL 430771 (S.D.N.Y. Jan. 26, 2010) ...................................................38
In re: McCormick & Co., Inc., 217 F. Supp. 3d 124 (D.D.C. 2016) .............................................18
In re Mid-Atl. Toyota Antitrust Litig., 560 F. Supp. 760 (D. Md 1983) ..........................................8
Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984) .................................................8, 13
In re NASDAQ Mkt-Makers Antitrust Litig., 172 F.R.D. 119 (S.D.N.Y. 1997) ......................30, 35
Newcal Indus., Inc. v. Ikon Office Sol., 513 F.3d 1038 (9th Cir. 2008) .........................................25
Ohio v. Am. Express Co., 138 S. Ct. 2274 (2018) .............................................................24, 26, 28
Palm Beach Golf Ctr-Boca, Inc. v. Sarris, 781 F.3d 1245 (11th Cir. 2015) .................................27
Procaps S.A. v. Patheon, Inc., 845 F.3d 1072 (11th Cir. 2016) ..............................................21, 22
Quality Auto Painting Ctr. of Roselle v. State Farm Indem. Co., 917 F3d 1249
(11th Cir. 2019) ..........................................................................................................................6
Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421 (9th Cir. 1995) .........................................28
In re Salmon, Case No. 19-21551-CIV-ALTONAGA/Louis, 2021 WL 1109128
(S.D. Fla. Mar. 23, 2021) ................................................................................................. passim
Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555 (11th Cir. 1991) .......................................7
Spain v. Brown & Williamson Tobacco Corp., 363 F.3d 1183 (11th Cir. 2004).............................5
Spanish Broad. Sys. of Fla. v. Clear Channel Commc’ns., 376 F.3d 1065 (11th
Cir. 2004) ...........................................................................................................................24, 25
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 5 of 47

Spectators’ Commc’n Network Inc. v. Colonial Country Club, 253 F.3d 215 (5th
Cir. 2001) ...........................................................................................................................13, 14
Stewart Glass & Mirror, Inc. v. U.S.A. GLAS, Inc., 17 F. Supp. 2d 649 (E.D. Tex.
1998) ........................................................................................................................................15
Swierkiewicz v. Sorema, N.A., 534 U.S. 506 (2002) ............................................................5, 25, 27
In re Terazosin Hydrochloride Antitrust Litig., 352 F. Supp 2d 1279 (S.D. Fla.
2005) ........................................................................................................................................22
Todd v. Exxon Corp., 275 F.3d 191 (2d Cir. 2001) .......................................................................25
Tops Mkts. Inc. v. Quality Mkts. Inc., 142 F.3d 90 (2d Cir. 1998) ................................................24
Toys “R” Us, Inc. v. Fed. Trade Comm’n, 221 F.3d 928 (7th Cir. 2000) .....................................28
U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986 (11th Cir. 1993) ......................................25
United Am. Corp. v. Bitmain, Inc., No. 18-CV-25106, 2021 WL 1807782 (S.D.
Fla. Mar. 31, 2021) ....................................................................................................................7
United States v. Alex. Brown & Sons, 963 F. Supp. 235 (S.D.N.Y. 1997) ....................................31
United States v. Container Corp. of Am., 393 U.S. 333 (1969) .....................................................11
United States v. Falstaff Brewing Corp., 410 U.S. 526 (1973) .......................................................7
United States v. Gacnik, 50 F.3d 848 (10th Cir. 1995) ..................................................................14
United States v. Microsoft Corp., 253 F.3d 34 ..............................................................................28
United States. v. Parke, Davis & Co., 362 U.S. 29 (1960) ......................................................11, 13
United States v. Seigler, 990 F.3d 331 (4th Cir. 2021) ..................................................................15
Univ. Express, Inc. v. U.S. Sec. Exchange Comm’n, 177 F. App’x 52 (11th Cir.
2006) ........................................................................................................................................38
Universal Grading Serv. v. eBay, Inc., No. C-09-2755-RMW, 2012 WL 70644
(N.D. Cal. Jan. 9, 2012) ...........................................................................................................32
In re Urethane Antitrust Litig., 2013 WL 2097346 (D. Kan. May 15, 2013) ...............................14
Vernon v. Med. Mgmt. Assocs. of Margate, Inc., 912 F. Supp. 1549 (S.D. Fla.
1996) ..................................................................................................................................27, 31
Williamson Oil Co., Inc. v. Phillip Morris, USA, 346 F.3d 1287 (11th Cir. 2003) .......................15
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 6 of 47

vii

Statutes
Clayton Act, 15 U.S.C. § 12 ....................................................................................................33, 34
Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376 .................. passim
Securities Exchange Act of 1934, 15 U.S.C. § 78o ............................................................... passim
Sherman Act, 15 U.S.C. § 1 ................................................................................................... passim
Other Authorities
2 AREEDA & HOVENKAMP, ANTITRUST LAW 264 ¶ 305(e) ......................................................21, 23
17 C.F.R. §§ 240.15a-1 to 240.15c6-1 .....................................................................................37, 39
17 C.F.R.§§ 242.100 to -105....................................................................................................37, 39
156 CONG. REC. E1347-01 (2010) .................................................................................................33
SEC. SEC, Thinking About Investing in the Latest Hot Stock? (Jan. 30, 2021),
https://www.sec.gov/oiea/investor-alerts-and-bulletins/risks-short-term-
trading-based-socialmedia-investor-alert .................................................................................39
SEC Staff Report, SEC, Staff Report on Equity and Options Market Structure
Conditions in Early 2021 (October 14, 2021), available at
https://www.sec.gov/files/staff-report-equity-options-market-struction-
conditions-early-2021.pdf. ...........................................................................................32, 38, 40
Shortening the Securities Transaction Settlement Cycle, Release No. 34-94196
(issued February 9, 2022) (publication in Federal Register forthcoming) (to be
codified at 17 C.F.R. pts. 232, 240, and 275), available at
https://www.sec.gov/rules/proposed/2022/34-94196.pdf ........................................................37

Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 7 of 47

I.
INTRODUCTION

Plaintiﬀs’ Amended Consolidated Class Action Complaint (the “Amended Complaint”)1
alleges with requisite speciﬁcity that Defendants entered into an agreement, culminating in
never-before-seen trading restrictions that eliminated the ability of ordinary Retail Investors’
ability to purchase the Relevant Securities. Pursuant to that agreement, Defendants restrained
Retail Investors’ ability to purchase shares in the Relevant Securities, in a scheme to suppress the
stock prices of the Relevant Securities in order to protect Citadel Securities’s exposed short
position. Defendants’ restraint resulted in signiﬁcant decreases in the price of the Relevant
Securities resulting in unfathomable losses to the stock holdings of ordinary Retail Investors.

Defendants challenge the suﬃciency of the Amended Complaint on three incorrect
grounds.2 First, Defendants argue that the ample allegations of fact contained in the Amended
Complaint amount only to ordinary business communications between two business partners and
that their conduct was otherwise innocent. ๠is is wrong. Plaintiﬀs plausibly allege speciﬁc
actions of Defendants’ executives before and after the trading restrictions, a pattern of suspicious
communications before and after the imposition of the trading restrictions, and the
unprecedented nature of the restraints, which when viewed as a whole, without dismembering it
into parts, a jury can support the inference of an anticompetitive agreement. Cont’l Ore Co. v.
Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962) (illegal agreement “not to be judged
by dismembering it and viewing its separate parts, but only by looking at it as a whole”) (internal
quotation marks omitted). As before, Plaintiﬀs allege facts that show market conditions made the
market susceptible to anticompetitive and unlawful collusion; that Defendants had a motive to
collude, and that the market behaved in an anticompetitive manner. Plaintiﬀs also detail
Defendants’ pretextual explanations and mischaracterizations of their conduct. Defendants’
alternative explanations of their conduct with facts outside the Amended Complaint only serve to
identify factual disputes, inappropriate to resolve at this juncture.

Second, Defendants assert that Plaintiﬀs have failed to set forth the remaining elements
of a Section 1 claim. Defendants’ request that the Court determine at this juncture that the rule of

1 “¶ __” citations are to the Amended Complaint unless otherwise indicated.
2 Defendants’ motion to dismiss largely rehashes the arguments levied against Plaintiffs initial
consolidated class action complaint. Plaintiffs have heard the Court’s concerns and addressed
them in the Amended Complaint. See ECF No. 438 (the “MTD Order”). Defendants seem to
largely ignore Plaintiffs’ new allegations.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 8 of 47

2
reason applies to Plaintiﬀs’ claim is premature given the fact-bound nature of the inquiry.
Nonetheless, the Amended Complaint sets forth a paradigmatic anticompetitive agreement with
the purpose and eﬀect to reduce output and degrade quality—that is a per se violation. Even
were the rule of reason to apply, Plaintiﬀs’ allegations should be sustained. Plaintiﬀs allege the
anticompetitive eﬀects of the agreements through facts which constitute direct and indirect proof.
๠e Amended Complaint sets forth the geographic market and product features of the market in
which Defendants operate. Further, the Amended Complaint sets forth that Defendants have
market power in the relevant market and that Defendants wielded that market power to eﬀectuate
actual detrimental eﬀects in the relevant market. And Rule 12 dismissals are disfavored when
predicated on fact-intensive relevant market grounds. Jacobs v. Tempur-Pedic Int’l, Inc., 626
F.3d 1327, 1336 (11th Cir. 2010).

Third, Defendants argue that regardless of whether the Amended Complaint sets forth a
cognizable antitrust claim, the Amended Complaint cannot continue because Plaintiﬀs’ claims
are preempted by the securities’ law. ๠is argument also falls short. ๠ere is no repugnancy
between antitrust law and securities law here. Even assuming arguendo that there were, Congress
has already determined that Plaintiﬀs’ antitrust claims should move forward by embedding into
the Dodd-Frank Act an expansive savings clause applicable to Plaintiﬀs’ claims. 12 U.S.C. §
5303 (2012). Further, Defendants mischaracterize what investigation has occurred, and lean
heavily on a report prepared by the SEC’s staﬀ, which by its own terms, is of limited
precedential value and does not purport to be the conclusive results of an investigation.
II.
FACTUAL BACKGROUND

Robinhood provides commission-free securities trading services for consumers through a
commission-free app-based platform. ¶ 43, 68-69, 305. By pioneering commission-free trading
and oﬀering an easy-to-use investment mobile app, Robinhood was able to capture millions of
Retail Investors. ¶ 324. Instead of receiving a commission, Robinhood earns revenue by routing
its customer trade orders to market makers (e.g., Citadel) in exchange for a fee, a process known
as payment for order ﬂow (“PFOF”).3

3 As set forth in the Amended Complaint, this comprises the Relevant Services Market, i.e., the
market for securities trading services. ¶ 305. This market is defined by a downstream consumer-
facing market comprised of no-fee brokerage trading applications and an upstream market
comprised of market makers that pay brokerage firms for order flow. ¶¶ 306-15.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 9 of 47

Citadel is a leading market maker; it ﬁlls orders it receives from brokers from its
available inventory or routes the order to an exchange or oﬀ-exchange. ¶¶ 8-10, 48. Indeed,
PFOF revenue, particularly the PFOF revenue that Robinhood receives from Citadel, is
Robinhood’s lifeblood; Robinhood derives as much as 80% of its revenues from PFOF. ¶ 75. In
the ﬁrst quarter of 2021 alone, Citadel was responsible for approximately 43%, or over $141
million, of Robinhood’s PFOF revenue. ¶ 80. Robinhood’s relationship with Citadel is so close
that it has been repeatedly described as a “partnership.” ¶ 244-45. Given that Robinhood was
planning on an initial public oﬀering (“IPO”) in 2021, Citadel’s PFOF was critical to
Robinhood’s growth. ¶¶ 82, 318.

As recognized by the SEC, PFOF creates conﬂicts of interest because of the tension
between maximizing PFOF and routing customer orders to the best markets. ¶ 223. Citadel itself
once advocated that PFOF should be “banned” because it was “anti-competitive.” ¶ 224.
A.
๠e January 2021 Short Squeeze

Leading up to January 27, 2021, Retail Investors such as Plaintiﬀs, based on their
research and observations, invested in the Relevant Securities primarily on the Robinhood
platform, and, as a result, the price of the Relevant Securities surged resulting in a “short
squeeze.” ¶¶ 23-41, 92-101, 127-43; see also ¶¶ 108-26 (describing short squeezes and gamma
squeezes). Meanwhile, Citadel’s short positions exposed it to massive losses if the price of the
Relevant Securities continued to rise—which is exactly what happened. ¶¶ 12, 199-208.

Rather than allow the market and competitive forces to operate, Defendants hatched an
anticompetitive scheme whereby Robinhood would agree to restrain trade and Citadel would
protect its short position. In exchange, Citadel would execute trades on the threat of ceasing
PFOF to Robinhood. During the same period, Robinhood executives also sold positions in the
Relevant Securities In the week prior to restricting trading, Citadel Securities and Robinhood
engaged in a series of communications. On Monday, January 25, 2021, in an email exchange
between Robinhood executives and Citadel’s Head of Execution Services, Robinhood informs
Citadel that, “We are on board” and took steps to further the arrangement. ¶ 230-233. On January
26, Robinhood Securities President and COO James Swartwout alerted other high-level
Robinhood employees that he had sold his own shares of AMC, one of the Relevant Securities,
further evidencing advance knowledge of the restriction on trading. ¶ 234. On January 27,
Citadel Securities “requested to speak that evening” with Robinhood. ¶ 237. In internal
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 10 of 47

4
messages, Robinhood executives indicated they believed that Citadel Securities would make
demands regarding PFOF. Id. While no one documented what was said, it is evident that
Robinhood and Citadel Securities communicated that evening, and Robinhood’s Swartwout
described internally that the discussions were a “total mess.” ¶ 241. ๠e communications
continued into the night. When Robinhood’s Swartwout asked for new “numbers,” a Citadel
employee revealed that those numbers were “[f]irming up” in light of a “follow up” conversation
between Robinhood’s Chief Legal Oﬃcer Dan Gallagher and Citadel. ¶ 242.
B.
Robinhood’s Unprecedented Trading Restrictions

On January 28, 2021, Robinhood implemented a historic and unprecedented restriction
on purchasing the Relevant Securities on its platform. Robinhood moved the Relevant Securities
to position close only (“PCO”), meaning that Robinhood users could sell, but were foreclosed
from purchasing the Relevant Securities. ¶ 179. In public statements, Robinhood attributed this
unprecedented move to the NSCC collateral call it received at 3:00 a.m., but made no mention of
the communications and understandings between itself and Citadel. ¶ 181. ๠e NSCC, however,
reduced Robinhood’s capital requirements and Robinhood was able to meet its revised deposit
requirement shortly after 9:00 a.m., before the markets opened. ¶ 181, 185. Nonetheless,
Robinhood continued to impose purchasing restrictions on the Relevant Securities for the
entirety of the trading day. ¶ 264. Despite raising $3.4 billion in the days to follow, Robinhood
continued to limit the number of positions in the Relevant Securities its users could acquire
through February 4, 2021. ¶ 261, 264. Notably, throughout this time, Citadel and Robinhood
continued to communicate. ¶ 258. On January 30, while Robinhood’s trading limitations were
still in place, Citadel reached out to Robinhood to “coordinate messaging.” Id.

Robinhood’s unprecedented restrictions had their intended eﬀect. ๠ey led to a massive
sell-oﬀ of the Relevant Securities, causing hundreds of millions of dollars in losses to consumers.
¶¶ 197-208. ๠e restrictions were successful as planned. Citadel Securities was able to cover its
short position by purchasing the Relevant Securities at artiﬁcially reduced prices. ¶ 209.
III.
STANDARD OF REVIEW

“[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rule 8(a)(2)
requires only a short and plain statement of a claim for relief to “‘give the defendant fair notice
of what the . . . claim is and the grounds upon which it rests.’” Erickson v. Pardus, 551 U.S. 89,
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 11 of 47

5
93 (2007) (quoting Twombly, 550 U.S. at 555); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“To survive a motion to dismiss, a complaint must contain suﬃcient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face’”). ๠ere are no “heightened” pleading
standards for antitrust cases. Twombly, 550 U.S. at 570; see also Swierkiewicz v. Sorema, N.A.,
534 U.S. 506, 513 (2002); Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination
Unit., 507 U.S. 163, 168 (1993); Andrx Pharms., Inc. v. Elan Corp., 421 F.3d 1227, 1234-35
(11th Cir. 2005) (view that heightened pleading requirements apply to antitrust claims has been
rejected in favor of applying Rule 8(a)’s notice pleading standard); In re Disposable Contact
Lens Antitrust Litig., 215 F. Supp. 3d 1272, 1300 (M.D. Fla. 2016) (“Twombly does not impose a
heightened pleading requirement on antitrust complaints.”).

Under Rule 12(b)(6) “[w]hen reviewing a motion to dismiss, a court construes the
complaint in the light most favorable to the plaintiﬀ and takes the factual allegations as true.” In
re Salmon, Case No. 19-21551-CIV-ALTONAGA/Louis, 2021 WL 1109128, at *9 (S.D. Fla.
Mar. 23, 2021) (citing Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369
(11th Cir. 1997)); accord Jackson v. Wal-Mart Stores, Inc., 753 F. App’x 866, 869 (11th Cir.
2018) (“Iqbal tells us we must assume the truth of all well-pleaded allegations except legal
conclusions, regardless of whether evidence may ultimately support them.”). “A motion to
dismiss is granted only when the movant demonstrates ‘beyond doubt that the plaintiﬀ can prove
no set of facts in support of his claim which would entitle him to relief.’” Spain v. Brown &
Williamson Tobacco Corp., 363 F.3d 1183, 1187 (11th Cir. 2004) (quoting Conley v. Gibson, 355
U.S. 41, 45-46 (1957)). In antitrust cases, where “‘the proof is largely in the hands of the alleged
conspirators,’ dismissals prior to giving the plaintiﬀ ample opportunity for discovery should be
granted very sparingly.” Hosp. Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746 (1976)
(citation omitted). Accordingly, a complaint’s allegations need only nudge the conspiracy claims
“across the line from conceivable to plausible” and “raise a reasonable expectation that discovery
will reveal evidence of illegal agreement.” Disposable Contact Lens, 215 F. Supp. 3d at 1306
(citation omitted).
IV.
ARGUMENT

Section 1 of the Sherman Act provides “[e]very contract, combination . . . , or conspiracy,
in restraint of trade or commerce among the several States, or with foreign nations, is declared to
be illegal.” 15 U.S.C. § 1 (alterations added). Section 1 “prohibits (1) conspiracies that (2)
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 12 of 47

6
unreasonably (3) restrain interstate or foreign trade.” Quality Auto Painting Ctr. of Roselle v.
State Farm Indem. Co., 917 F3d 1249, 1260 (11th Cir. 2019) (citation omitted).

Defendants’ fundamental challenge to Plaintiﬀs’ Section 1 claim is that Plaintiﬀs’ have
failed to plead an agreement between Citadel Securities and Robinhood in violation of the
antitrust laws. ECF No. 456 (the “MTD”) at 12. Defendants are wrong. Under Twombly,
Plaintiﬀs must provide a complaint “with enough factual matter (taken as true) to suggest that an
agreement was made.” Salmon, 2021WL 1109128 at *10 (quoting Twombly, 550 U.S. at 556).
Plaintiﬀs allege facts showing that Robinhood and Citadel Securities entered into an agreement
that Robinhood would restrict trading on or about January 28, 2021, and that the restraint was
imposed. ¶¶ 14, 185-89. Plaintiﬀs allege, in copious detail, facts showing an agreement, and
Plaintiﬀs oﬀer ample evidence, when taken together, from which an agreement can be plausibly
inferred. As acknowledged by Robinhood and Citadel Securities themselves, the two ﬁrms had a
close relationship, which they described as a “partnership.” ¶¶ 244-45. Further, Robinhood and
Citadel Securities engaged in numerous communications immediately before the imposition of
the trading restrictions—communications that this Court has already determined are “supportive
of a conspiracy” due to their timing and participants. MTD Order at 43. ๠ose communications
presaged a complex and historically unprecedented restraint—a broad restriction on Retail
Investors’ ability to purchase the Relevant Securities.4 ๠ese allegations, along with the ample
circumstantial evidence, infer an anticompetitive agreement in violation of the antitrust laws.
Defendants next argue that Plaintiffs fail to allege the necessary elements to plead a Section
1 claim under the rule of reason. MTD at 12. This argument also fails. For the reasons set forth in
Part IV.B.i., infra, it is premature for the Court to determine whether the per se rule or the rule of
reason applies at the motion to dismiss stage. Regardless, Plaintiffs have pleaded sufficient facts
to sustain their Section 1 claim under the rule of reason – the relevant product market, Defendants’
market power and the paradigmatic antitrust injuries that occurred in the relevant market and which

4 In particular, the Amended Complaint sets forth that Robinhood engaged in unprecedented
trading restrictions, i.e., broad ranging restrictions on Retail Investors’ ability to purchase
securities, which was a marked departure from its, or indeed, any broker-dealer’s, prior practice.
¶ 143. The actions of Robinhood’s executives suggested that this departure was planned. For
example, Robinhood’s Swartwout sold his shares in AMC, which he would only do if he
expected the price of AMC to drop. ¶ 234. Further, there are no facts (nor do Defendants offer
any) that Citadel Securities was surprised when Robinhood imposed its unheard-of trading
restrictions.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 13 of 47

7
stemmed from Defendants’ conspiracy. Finally, Defendants argue that Plaintiffs’ antitrust claim is
precluded by the federal securities laws. MTD at 27-35. This argument likewise fails. There is no
repugnancy between antitrust law and securities law for the conduct at issue here.
A.
Plaintiﬀs Plausibly Allege an Anticompetitive Agreement

To allege an antitrust conspiracy, a plaintiﬀ need only “present direct or circumstantial
evidence that reasonably tends to prove that the [defendant] and others had a conscious
commitment to a common scheme designed to achieve an unlawful objective.” Salmon, 2021
WL 1109128, at *10 (citing Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984)).
Notably, plaintiﬀs are not required to allege an explicit agreement. See DeLong Equip Co. v.
Wash. Mills Abrasive Co., 887 F.2d 1499, 1515 (11th Cir. 1989). Nor are Plaintiﬀs required to
allege the speciﬁc discussions participants had. Costco Wholesale Corp. v. Johnson & Johnson
Vision Care, Inc., No. 3:15-cv-734-J-20JRK, 2015 WL 9987969, at *14 (M.D. Fla. Nov. 4, 2015)
(“At the motion to dismiss stage, ‘[p]laintiﬀs need not allege the existence of collusive
communications in “smoke ﬁlled rooms”’ . . . in order to state a § 1 Sherman Act claim.”)
(quoting In re Delta/AirTran Baggage Fee Antitrust Litig., 733 F. Supp. 2d 1348, 1360 (N.D. Ga.
2010)). In antitrust cases, where “‘the proof is largely in the hands of the alleged conspirators,’
dismissals prior to giving the plaintiﬀ ample opportunity for discovery should be granted very
sparingly.” Hosp. Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746 (1976) (citation
omitted), 425 U.S. 738, 746 (1976) (citation omitted). In fact, “[c]onspiracies are rarely
evidenced by explicit agreements and must always be proven by inferences that may be fairly
drawn from the behavior of the alleged conspirators.”5 DeLong, 887 F.2d at 1515 (citations
omitted); see also United States v. Falstaﬀ Brewing Corp., 410 U.S. 526, 536 n.13 (1973)
(“circumstantial evidence is the lifeblood of antitrust law.”).

“(T)he character and eﬀect of a conspiracy are not to be judged by dismembering it and
viewing its separate parts, but only by looking at it as a whole.” Cont’l Ore, 370 U.S. at 699

5 Courts recognize that direct evidence in antitrust cases is “rare.” Seagood Trading Corp. v.
Jerrico, Inc., 924 F.2d 1555, 1573 (11th Cir. 1991); United Am. Corp. v. Bitmain, Inc., No. 18-
CV-25106, 2021 WL 1807782, at *10 (S.D. Fla. Mar. 31, 2021) (citing DeLong, 887 F.2d at
1515) (“Direct evidence of a § 1 conspiracy is rare, and most antitrust conspiracies are proved by
circumstantial evidence.”); see also Battle v. Lubrizol Corp., 673 F.2d 984, 992 (8th Cir. 1982)
(“we think that it is most unlikely that antitrust plaintiffs, like any other plaintiffs alleging
conspiracy, will have direct evidence”).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 14 of 47

8
(citation omitted, alteration in original); Associated News, Inc. v. Curtis Circulation Co., Inc.,
Civ. A. No. H-80-1201, 1986 WL 13791, *6 (S.D. Tex. Dec. 4, 1986) (combined weight of
circumstantial evidence was “suﬃcient to raise a genuine issue of fact as to an alleged vertical
conspiracy” at summary judgment). Plaintiﬀs need not rebut legitimate reasons Defendants may
oﬀer for their suspicious conduct. Salmon, 2021 WL 1109128, at *15; see also id. at *9 (“When
reviewing a motion to dismiss, a court construes the complaint in the light most favorable to the
plaintiﬀ and takes the factual allegations as true.”). Plaintiﬀs’ allegations at this juncture need not
exclude the possibility of unilateral conduct. See, e.g., Helicopter Support Sys. Inc., v. Hughes
Helicopter, Inc., 818 F.2d 1530, 1534 (11th Cir. 1987) (Plaintiﬀs must “adduce positive evidence
which tends to exclude the possibility of unilateral action”) (italics added). Accordingly,
Plaintiﬀs need only allege facts suﬃcient to infer the existence of a conspiracy. See In re Mid-
Atl. Toyota Antitrust Litig., 560 F. Supp. 760, 780 (D. Md 1983) (holding “that suﬃcient
circumstantial evidence exists to raise a genuine issue about a tacit agreement among
defendants”). Plaintiﬀs have suﬃciently done so here.

Plaintiﬀs have alleged with speciﬁcity that Robinhood imposed historically
unprecedented trading restrictions on the Relevant Securities, which resulted in a signiﬁcant
decrease in their share prices. ๠at these restrictions were imposed as part of “a common
scheme” is well supported by Plaintiﬀs’ allegations. See Monsanto, 465 U.S. at 764
(“Circumstances must a reveal ‘a unity of purpose or a common design and understanding, or a
meeting of minds in an unlawful arrangement.’”). ๠e Amended Complaint is replete with
allegations of direct communications between Citadel Securities and Robinhood before and after
the imposition of the highly irregular and unprecedented restraint. ¶¶ 227, 230-241. Given the
“partnership” between Defendants, these communications are highly revealing in and of
themselves. Moreover, the communications’ timing, context, and the players involved support a
reasonable inference that the restrictions were the result of Defendants’ concerted action. See
MTD Order at 41 (timing and overall context of communications between Defendants’ high-
level executives could be inferred to relate to January 28 trading restrictions); id. at 43 (timing
and context of Defendants’ communications lends credence to Plaintiﬀs’ conspiracy theory); see
also Delta/AirTran, 733 F. Supp. 2d at 1360 (“unlawful conspiracies may be inferred when
collusive communications among competitors precede changed/responsive business practices”).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 15 of 47

๠e Amended Complaint contains additional circumstantial evidence from which
collusion may be inferred. It sets forth economic evidence of Defendants’ collusion, e.g., Citadel
Securities’ short positions in the Relevant Securities. ¶¶11, 14, 142, 211, 398. It details how
Defendants’ executives acted in ways consistent with advanced knowledge of the conspiracy,
such as selling their own shares of the Relevant Securities ahead of the purchasing restrictions.
¶ 234. ๠e Amended Complaint contains detailed allegations about how Robinhood relies on the
revenue that it receives from Citadel Securities for its survival, and how Robinhood’s reliance on
Citadel Securities provided motive to collude in light of Robinhood’s pending IPO and the fact
that Citadel Securities could easily terminate its relationship with Robinhood at any time. ¶¶ 316-
23. ๠e Amended Complaint also sets forth structural evidence, including market characteristics
that demonstrate that the market is susceptible to collusion. ¶¶ 307-11, 324-46.

๠ese allegations lead to the inference that Robinhood and Citadel Securities colluded—
and that is enough at this stage of the litigation. See City of Rockford v. Mallinckrodt ARD, Inc.,
360 F. Supp. 3d 730, 749 (N.D. Ill. 2019) (“๠e court anticipates that further discovery will shed
light on [Citadel’s] knowledge of and role in the [trading restrictions], if any. But at [motion to
dismiss], the court draws all reasonable inferences from the complaint in favor of plaintiﬀs and
taking the [Amended Complaint] as a whole ﬁnds that plaintiﬀs have suﬃciently alleged a
conspiracy.”); Costco Wholesale Co., v. Johnson & Johnson Vision Care Inc., 15-cv-734-J-
20JRK, 2015 WL 9987969, at *18 (M.D. Fla. Nov. 4, 2015).
i.
Defendants’ Communications and Conduct Support the Inference of a
Conspiracy

Plaintiﬀs have alleged with particularity communications and conduct between
Robinhood and Citadel Securities that preceded the January 28, 2021 restriction in trading. ๠ese
communications strongly suggest the decision to restrict trading was pursuant to a common
understanding and course of conduct reached during these communications. Delta/AirTran, 733
F. Supp. 2d at 1360. Plaintiﬀs speciﬁcally allege repeated communications between Robinhood
and Citadel Securities which resulted in the January 28, 2021 trading restrictions. ¶¶ 227–33.
Plaintiﬀs speciﬁcally allege that high level executives of Robinhood and Citadel communicated
and made an express agreement to restrict trading. Id.

For example, on January 25, 2021, Citadel Securities’ Head of Executive Services had
discussions with Robinhood’s Vice President of Corporate Relations and Communications, Josh
Drobnyk. ¶ 227. While the substance of the communications is undisclosed—and Plaintiﬀs have
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 16 of 47

10
not been provided a record of them—Drobnyk wrote afterwards that Robinhood was “on board.”
¶ 230. ๠is indicates, at a minimum, a request and Drobynk’s communication of assent and
agreement to that request. ๠ese messages and emails in turn refer to other undocumented private
conversations, telephone calls and other written communications, the substance of which have
never been revealed. Logically, there are likely many other communications that have not come
to light.6

Subsequent acts provide further support for the plausible inference that an agreement to
restrict trading was reached during those communications. Defendants knew in advance that the
trading restriction was going to be imposed, as evidenced by top Robinhood executives—who
knew of the discussions with Citadel Securities—sold their own shares of the Relevant Securities
to avoid damages to their own stock portfolios that eventually befell class members who were
the target of the agreement. ¶ 234. Robinhood’s Swartwout sold his shares of AMC in the days
leading up to the restrictions and encouraged others at Robinhood to do the same. Id. Given the
continued excitement around the Relevant Securities, and the continued upward momentum of
the share price, Swartwout’s choice to sell made little economic sense unless he knew about the
unlawful agreements to stop trading and to drive down prices in advance.

Moreover, the evening before Robinhood announced the trading restrictions, Robinhood
and Citadel executives again communicated. ¶ 235-41. Robinhood believed Citadel would make
demands regarding PFOF. ¶ 321. Robinhood depended on PFOF from Citadel Securities. PFOF
was crucial—the life blood—of Robinhood’s business model as it provided the revenue
necessary to oﬀer commission-free brokerage services to its customers. ¶¶ 4-5, 13, 75, 77-78, 81,
306, 316, 319, 323, 400. It was against Robinhood’s economic interest to restrict trading because
it would, among other things, cut oﬀ a vital source of income. ¶ 237. ๠ese contentious
conversations were described as a “total mess” and left Robinhood “beyond disappointed,”

6 Defendants continue to criticize the sufficiency of the Amended Complaint on the basis that
Plaintiffs had access to some documents that Defendants produced to certain government
regulators, only after the Court ordered them to be produced. ECF No. 323. There has been no
formal discovery, and indeed the Court has stayed discovery pending resolution of the attacks on
the pleadings. That is not the standard under Rule 8—the Amended Complaint should be judged
on its face, and it is of no moment that Plaintiffs have obtained access to a smattering of
documents, whether through their own investigation and in the context of this case. There has
been no formal discovery, and indeed the Court has stayed discovery pending resolution of the
attacks on the pleadings.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 17 of 47

11
indicating the discussions were regarding matters against Robinhood’s economic self-interest. ¶
241. Nonetheless, a meeting of the minds was reached because, as conﬁrmed by
communications, “numbers” were “[f]irming up” in advance of the trading restrictions. ¶ 242. At
a minimum, these conversations demonstrate an “acquiescence or agreement, and that this was
sought.’” Costco, 2015 WL 9987969, at *14 (quoting Monsanto, 465 U.S. at 764 & n.9). ๠is is
the essence of a meeting of the minds and proof of agreement under the antitrust laws. See
United States. v. Parke, Davis & Co., 362 U.S. 29, 43 (1960) (“whether this conspiracy and
combination was achieved by agreement or acquiescence . . . is immaterial”).7

Defendants’ conduct after the trading restrictions were imposed provide further evidence
of the agreement and bolster the plausibility of Plaintiﬀs’ claims. Citadel Securities was hardly
surprised with news of the trading restrictions—nor do Defendants argue to the contrary—even
though Robinhood’s actions were signiﬁcant and unprecedented. Far from it. After the trading
restrictions were imposed, top executives of Robinhood and Citadel acted in concert to
coordinate explanations regarding the restrictions.8 ¶ 258. ๠ese coordinated eﬀorts constitute
additional overt acts in furtherance of the conspiracy. Moreover, the explanations themselves
were incomplete, misleading, and untrue. See Part IV.A.ii., infra. ๠ey did not reﬂect or disclose
that the decision was the result of communications between Defendants or that it was made to
protect Citadel Securities’s positions in the Relevant Securities. ¶¶ 14, 185-89. Further, these
communications evidence a shared motive to conceal the true nature of the agreement and the
cause for the restrictions. ๠e Court has already determined that the communications between
Robinhood and Citadel Securities are “supportive of a conspiracy.” MTD Order at 43.

Defendants counter these factual allegations with their own explanations and
justiﬁcations. Defendants say their conduct merely reﬂects the “normal” course of conduct
between them. MTD at 16. ๠is argument is not well taken. As an initial matter, additional
arguments regarding Defendants’ conduct are improper on a Rule 12 motion; Defendants are

7 See also Interstate Cir., Inc. v. United States, 306 U.S. 208, 227 (1939) (“elementary that an
unlawful conspiracy may be and often is formed without simultaneous action or agreement on
the part of the conspirators”); United States v. Container Corp. of Am., 393 U.S. 333, 335 (1969)
(“[W]hen a defendant requested and received price information it was affirming its willingness to
furnish such information”).
8 Notably, the participants copied Citadel Securities’ “GCs,” i.e., general counsel, and explicitly
noted they were doing so “for privilege.” ¶ 258. As evidenced in Part IV.A.ii., infra, attempts to
conceal communications is circumstantial evidence inferring conspiracy and collusion.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 18 of 47

12
bound by the allegations in the complaint—which are presumed to be true—and additional
counterfactual assertions merely frame factual disputes to be resolved by the trier of fact. See,
e.g., Disposable Contact Lens, 215 F. Supp. at 1279 (on “motion to dismiss, ‘the court is limited
to what appears on the face of the complaint.’”) (citing Jacobs, 626 F.3d at 1340).

Moreover, Defendants’ attempt to recharacterize this conduct as “normal” is itself far-
fetched and implausible. First, the nature of the restrictions themselves was unprecedented.
Never had a broker-dealer enacted such wide-ranging prohibitions on trading. See Disposable
Contact Lens, 215 F. Supp. 3d at 1295 (complex and historically unprecedented changes may
support inference of conspiracy).

Second, the communications themselves indicate they were far from ordinary to those
actually involved in them. ๠e participants described these conversations as a “total mess” and
were left “beyond disappointed” in how they “went down.” ¶¶ 241, 245.

๠ird, that Defendants’ executives were dumping their stock in advance of the imposition
of the restrictions is not “normal,” and Defendants do not contend otherwise —Robinhood
executives would have no reason to sell their own shares of the Relevant Securities unless they
had advance knowledge of the trading restrictions. Likewise, Defendants’ after-the-fact
cooperation to manufacture common pretextual explanations is not normal either.

Whether or not Robinhood’s agreement to restrict trading resulted from coercion by
Citadel Securities is of no moment. Even if it were so, this does not defeat an antitrust claim or
show there was no meeting of the minds. Agreements obtained through coercion are actionable.9
Isaksen v. Vermont Castings, Inc., 825 F.2d 1158, 1164 (7th Cir. 1987) (Posner, J.), is instructive.
In Isaksen, a dealer complained that his supplier coerced him into an agreement to raise the
prices for stoves in violation of Section 1 of the Sherman Act. Id. at 1161-63. ๠e plaintiﬀ oﬀered
proof, consistent with settled antitrust authorities, that the plaintiﬀ had been coerced into the

9 The communications between Defendants on January 27 before purchasing prohibitions were
placed strongly suggest Citadel Securities leveraged its relationship with Robinhood. Even
before Defendants communicated that day, Robinhood executives already suspected that Citadel
Securities was going to make demands regarding PFOF. ¶ 237. Evidently those demands were
issued, and it is apparent that Robinhood was left displeased. The discussions between Citadel
Securities and Robinhood prompted Vlad Tenev, Robinhood’s CEO, to seek to improve the
relationship by speaking directly to Ken Griffin at Citadel. Nevertheless, what is clear is that
Robinhood and Citadel Securities had a meeting of the minds, and “numbers” were “firmed up”
as a result of an unrecorded conversation between them. ¶ 242.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 19 of 47

13
agreement.10 After the jury returned a verdict in favor of the dealer, the lower court granted the
supplier’s motion for judgment notwithstanding the verdict. Id. at 1161. ๠e Seventh Circuit
reversed, ﬁnding that there was a vertical agreement between the dealer and the supplier in
violation of the antitrust laws. See id. at 1163-64.11

As the Isaksen court explained, “the motives for the dealer’s adhering to a suggested list
price are irrelevant. If (but only if) he agrees to adhere (having been asked to), there is an
agreement, no matter how unwilling he is; but it does not follow that his agreement to adhere can
never be implicit or signiﬁed by conduct in lieu of promissory language.” 825 F.2d at 1164.
Courts in this Circuit apply and follow this settled authority. E.g., Costco, 2015 WL 9987969, at
*18 (M.D. Fla. 2015) (citing Isaksen, 825 F.2d at 1164, with approval). As in Isaksen, the tense
conversations between Robinhood and Citadel Securities evidence a similar course of dealings
here: Robinhood, who had already suspected Citadel Securities would make demands on PFOF,
was asked to restrict trading or Citadel Securities would not route its orders, denying Robinhood
the precious proﬁts and revenue from payment for order ﬂow. Robinhood ultimately
acquiesced.12 See Spectators’ Commc’n Network Inc. v. Colonial Country Club, 253 F.3d 215,
221 (5th Cir. 2001) (“Conspirators who are not competitors of the victim may have no interest in
curtailing competition in a market in which they do not compete; nevertheless, when they have
been enticed or coerced to share in an anticompetitive scheme, there is still a combination within

10 As Judge Posner recognized, parties “knuckling under to pressure” can be found to violate the
antitrust law and explained “[t]he fact that [the plaintiff] may have been coerced into agreeing is
of no moment; an agreement procured by threats is still an agreement for purposes of section 1.”
825 F.2d at 1163; see also Albrecht v. Herald, 390 U.S. 145, 150 n. 6 (1968); Parke, Davis &
Co., 362 U.S. at 45. “[A] conspiracy is no less sinister because some its members are
intimidated, rather than bribed, into doing it.” Isaksen, 825 F.2d at 1163.
11 In doing so, the Seventh Circuit analyzed the Supreme Court’s precedent in Monsanto, 465
U.S. 752 (1984) and exclaimed: “[W]e do not think the [Monsanto] Court intended to go so far
as to rule that if a supplier telephones a dealer and tells him, ‘Raise your price by next Thursday,
or I’ll ship you defectives goods,’ and the dealer merely grunts, but complies, this is not
actionable as an agreement to fix the dealer’s resale price. If it were not, there would be very
little left of the rule against vertical price-fixing, which the Court in Monsanto decided not to
reexamine.” Isaksen, 825 F.2d at 1164 (citing Monsanto, 465 U.S. at 761, n.7).
12 This is apparent as Robinhood’s Chief Legal Officer Dan Gallagher had further unrecorded
conversations with Citadel Securities’s executives which resulted in the two firms firming up
numbers. ¶ 242. Citadel Securities also continued to route orders on January 28, 2021 in the
symbols that Robinhood did not restrict, evidencing that whatever threats that may have been
made need not have been carried out.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 20 of 47

14
the meaning of the Sherman Act.”); see also id. at 220 (“even reluctant participants have been
held liable for conspiracy [under the antitrust law]”).
ii.
Defendants’ Pattern of Concealment Infers a Conspiracy

๠e steps Defendants took to conceal the facts of the agreement and their
communications regarding it constitute additional circumstantial evidence of agreement. “[A]cts
of concealment are circumstantial evidence of a conspiracy’s existence.” In re Urethane Antitrust
Litig., 2013 WL 2097346, at *11 (D. Kan. May 15, 2013) (citing United States v. Curtis, 635
F.3d 704, 717 (5th Cir. 2011)); see also United States v. Gacnik, 50 F.3d 848, 852 (10th Cir.
1995) (“the act of concealment may be taken as evidence of a conspiracy”). Courts routinely rely
on such acts as evidence of a conspiracy even at later stages of litigation. See, e.g., Belcher v. Atl.
Capital Realty, LLC, 2010 WL 11507399, at *5 (M.D. Fla. Sep. 17, 2010) (“Although this is
merely circumstantial evidence of a conspiracy, such evidence is suﬃcient to avoid summary
judgment so long as it “reasonably support[s] an inference [of a] shared . . . conspiratorial
objective.”) (citation omitted, italics added).

๠e written records that Plaintiﬀs have obtained indicate that the executives and corporate
representatives involved in the communications between Robinhood and Citadel Securities did
not accurately report or record—at least in writing—the communications regarding the decisions
to restrict trading. Drobynk’s indication of assent is vague—purposefully so—as to the speciﬁc
discussions which produced that agreement. ¶ 230. Robinhood also was careful to make clear
that communications were to be channeled through Lucas Moskowitz, Robinhood’s general
counsel. Id. Indeed, the Amended Complaint alleges with speciﬁcity aﬃrmative steps
Defendants’ executives undertook to cloak their suspicious communications through the use of
attorneys as intermediaries, hoping to take advantage of the attorney client privilege. As alleged,
Citadel Securities emails sent to Robinhood speciﬁcally indicate that they were sent with
Citadel’s “GC’s” copied for “privilege.” ¶ 258. ๠e emails make clear that inside counsel were
purposefully included to protect the communication from subsequent disclosure.

๠e fact that communications between the two companies, involving many hundreds of
millions of dollars, were conducted only in person, via telephone, or through lawyers with no
written record indicates a lack of transparency and reveals an eﬀort to conceal the nature and
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 21 of 47

15
scope of the agreement reached.13 See United States v. Seigler, 990 F.3d 331, 339 (4th Cir. 2021)
(jury may infer existence of vertical conspiracy based on circumstantial evidence including
“familiarity” of conversation among defendants where they used “coded and circumlocutory
language”).
iii.
Additional Circumstantial Evidence of the Scheme

Plaintiﬀs also plead additional circumstantial evidence that “tends to exclude the
possibility of independent action.”14 Williamson Oil Co., Inc. v. Phillip Morris, USA, 346 F.3d
1287, 1301 (11th Cir. 2003).

Motive to Collude. ๠e motive to collude is additional circumstantial evidence suﬃcient
to infer an agreement. See Disposable Contacts Lens, 215 F. Supp. 3d at 1298 (ﬁnding
anticompetitive agreement where conspirator had motive to “make more money” and “worked
closely” with coconspirator). Plaintiﬀs have alleged facts that demonstrate Defendants’ strong
motive to collude. Defendants’ lucrative self-styled PFOF “partnership” (see ¶ 244) provided
ample motive for Defendants to collude.

Robinhood bases its entire business model on payments for order ﬂow from Citadel
Securities. Robinhood derives 80% of its revenues from payment for order ﬂow in general. ¶
316. Indeed, without Citadel’s payment for order ﬂow, Robinhood would not be able to
economically support providing no fee brokerage transactions. ¶¶ 324-329. Moreover, Citadel
Securities was the single largest contributor to Robinhood’s payment for order ﬂow revenue. See,
e.g., ¶ 5. (43% of Robinhood’s PFOF revenue in the ﬁrst quarter of 2021 alone). Citadel

13 Plaintiffs do not ask the Court to infer conspiracy merely because Defendants communicated
over the phone. See MTD Order at 44-45. Rather, the Amended Complaint sets forth a pattern of
concealment between Robinhood and Citadel Securities that leads to an inference of conspiracy.
14 “Plus factors” refer to an organizational framework of understanding circumstantial evidence
that supports an inference of a conspiracy; it is of no moment whether the conspiracy is
horizontal or vertical. See In re Dealer Mgmt. Sys. Antitrust Litig., MDL 2817, 2022 WL 199271,
at *14 (N.D. Ill. Jan. 21, 2022) (“A plus-factor analysis provides a way to organize circumstantial
evidence that, in the plaintiff’s view, reduces the probability that defendants were acting
independently.”). Such plus factors can be relied on for a plausible inference of a conspiracy,
regardless of whether the agreement is between horizontal competitors, suppliers and
distributors, or other market participants. See Stewart Glass & Mirror, Inc. v. U.S.A. GLAS, Inc.,
17 F. Supp. 2d 649, 653 (E.D. Tex. 1998) (“Whether the plaintiff alleges a horizontal conspiracy
among competitors, or a vertical conspiracy between a manufacturer/seller and a
distributor/buyer, the focus remains the same: is there sufficient evidence to create a reasonable
inference of concerted action to engage in illegal conduct?”).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 22 of 47

16
Securities recognized how valuable Robinhood’s order ﬂow was, and pays a premium for
Robinhood’s order ﬂow as compared with other brokerages who sold their order ﬂows. ¶ 76.
Citadel Securities was (and is) Robinhood’s most important market maker—Robinhood’s
revenue from Citadel Securities more than doubles that of its next highest revenue source.15

Critically, the payment for order ﬂow relationship was terminable by either party at any
time. ¶ 317. In other words, Citadel Securities, Robinhood’s single biggest commercial partner,
possessed the ability turn oﬀ its most important source of income and thereby possessed the
power to make or break the company. ๠is was particularly true the week of January 25, 2021,
the week of the trading restrictions, shortly before Robinhood’s IPO. During that time, Citadel
Securities constituted the great majority of Robinhood’s trading activity.16 ¶ 281. By cooperating
with Citadel, Robinhood protected the sine qua non of its business model, and avoided the
existential threat posed by Citadel Securities if Citadel had not been able to avoid the short
squeeze. Preserving its PFOF relationship with Citadel Securities provided Robinhood ample
motive to collude.17

In addition, as of January 2021, Citadel Securities had accrued massive short positions.
¶¶ 276, 280, 283-84. As the Court previously recognized, “[t]hat Citadel Securities held short
interests in the Relevant Securities is a reasonable inference to be drawn in Plaintiﬀs’ favor.”
MTD Order at 36. Citadel had the economic incentive to obtain Robinhood’s agreement to stop
trading in the Relevant Securities in order to exit its short positions, thereby avoiding a short

15 Employees of both firms recognized the strength and significance of the relationship. For
example, Citadel’s Head of Execution Services stated to Robinhood’s Moskowitz that the two
firms “obviously have a strong relationship.” ¶ 232.
16 During the week of January 25, 2021, according to FINRA OTC transparency data, Citadel
Securities’s trading activity was more than double that of Virtu Americas’s, the next most active
institutional participant. ¶ 281 (Citadel Securities accounted for 50% of trading by volume in
GME as compared to 12% for Virtu Americas, and 56% of trading activity in AMC as compared
to 25% for Virtu Americas).
17 The claim that Robinhood could have routed orders to the public exchanges in the event
Citadel Securities terminated its relationship with Robinhood, ignores the fundamental nature of
its business. Had Robinhood done so, Robinhood would have received no payment for order
flow. Indeed, its public offering was based on the maintenance of this structure. ¶318. Given
Citadel Securities’s position as Robinhood’s foremost PFOF partner by far, preserving that
relationship was paramount. Additionally, as trading activity volume indicates, other market
makers were not handling orders to the extent Citadel Securities was, Citadel Securities handled
more than double the transactions as the next market maker. ¶307. This left Robinhood with few,
if any, actual alternatives.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 23 of 47

17
squeeze and the hundreds of millions of dollars in losses that would have resulted. By driving the
prices of the Relevant Securities down, Citadel stood to beneﬁt by recouping the shares it sold
short, avoiding or mitigating its losses. ¶ 396. Citadel was acutely aware that it possessed
leverage over Robinhood to obtain agreement, even if Robinhood faced business losses as a
result.

Further the executives, oﬃcers, and managers of Citadel and Robinhood also possessed
their own motive to collude because they were also exposed to ﬁnancial ruin in the event of a
short squeeze. Indeed, they acted in accord, selling stock in advance of the restriction. ¶ 234.

The Structure of the Market Render It Susceptible to Collusion. Plaintiﬀs have provided
extensive detailed allegations regarding the characteristics that made it possible for Robinhood
and Citadel Securities to collude. See In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d
651, 655 (7th Cir. 2002) (recognizing that economic evidence of the structure of market making
collusion feasible can be relied on to infer existence of an agreement). As the Court has
previously acknowledged, Plaintiﬀs have identiﬁed “the existence of several characteristics that
each tend to make a market susceptible to anticompetitive conduct and unlawful collusion[.]”
MTD Order at 48. ๠ese allegations include that the market in which Defendants operate is
deﬁned by high barriers to entry, high ﬁxed costs, and low variable costs. ¶¶ 370-84.
Additionally, consumers using no-fee trading apps such as Robinhood’s platform are locked-in in
the short run.18 ¶¶385-92. ๠ese market characteristics render the market ripe for collusion.19

Evidence that the Market Behaved in a Noncompetitive Manner. Plaintiﬀs’ allegations
show that the market behaved in a noncompetitive manner. See High Fructose Corn Syrup, 295
F.3d at 655 (recognizing that economic evidence that market behaved in a noncompetitive
manner can be relied on to infer existence of an agreement). Plaintiﬀs allege that the trading
restriction stopped, suspending the operation of supply and demand, and driving prices down.
See Part IV.B.iv.b.2., infra. If Robinhood had not intervened, its customers would have been able

18 Consumer lock-in was particularly pronounced because Robinhood makes withdrawing or
transferring funds difficult, typically requiring days-long waiting periods and restricting users
from selling securities they already own if they initiated a withdrawal. ¶¶ 389-90. These delays
were exacerbated for Robinhood users during the time Robinhood maintained the restrictions on
purchasing the Relevant Securities. ¶ 391.
19 Plaintiffs have acknowledged the Court’s prior criticism and have now provided a clearer
picture of the relevant market, i.e., the market for securities trading services. See Part IV.B.iv.a.,
infra.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 24 of 47

18
to increase their positions in the Relevant Securities, prices would have continued to rise, and the
prospect of the nascent short squeeze would become more likely. As Citadel itself long ago
recognized when it sought to have payment for order ﬂow banned, the practice is rife with
conﬂicts of interest and “anti-competitive.” ¶ 224. Now, Citadel seeks to capitalize from the
noncompetitive market conditions it caused. Id.

Defendants’ Pretextual Explanations. Defendants oﬀer dubious pretextual explanation
and mischaracterizations for their conduct. Such pretextual statements support an inference of an
illegal conspiracy. See In re: McCormick & Co., Inc., 217 F. Supp. 3d 124, 132 (D.D.C. 2016)
(considering pretext as supporting evidence); ChoiceParts, LLC v. Gen. Motors Corp., 203 F.
Supp. 2d 905, 910 (N.D. Ill. 2002) (same); see also Delta/AirTran, 733 F. Supp. 2d at 1360 (N.D.
Ga. 2017) (“unlawful conspiracies may be inferred when collusive communications among
competitors precede changed/responsive business practices”). Defendants assert that it was
necessary for Robinhood to meet its capital requirements as set by the NSCC. ๠at the trading
restrictions were the result of regulatory order or ﬁat is untrue. As alleged, even before there was
any margin call, Robinhood and Citadel were engaged in heated discussions regarding the
degrading market conditions. Meanwhile, Robinhood’s executives were selling their own shares
of the Relevant Securities—well before Robinhood received any notiﬁcation from the NSCC
regarding its capital requirements. ¶¶ 234-46. In fact, Robinhood was quickly able to negotiate
down its $3 billion dollar margin call from the NSCC to $1.4 billion. ¶¶ 178, 181, 183.
Robinhood met its capital requirements before the markets opened and trading restrictions
imposed on January 28, 2021. ¶ 185. Even afterwards, Robinhood continued to satisfy its capital
requirements by accessing credit and raising capital, while continuing the trading restrictions.
Nonetheless, Robinhood maintains the capital requirements as the reason for the unprecedented
trading restrictions.20 ¶¶ 194, 262.
iv.
Defendants’ Proffered Alternative Explanations Create a Factual
Dispute And Do Not Suggest Plaintiffs’ Allegations Are Implausible

Defendants hang their hat on three counterfactual allegations that they claim defeat an
inference of motive for conspiracy: (1) Robinhood’s customers could have left Robinhood’s

20 As set forth in the Amended Complaint, the decision to implement restrictions on purchasing
only was arbitrary. Robinhood through its PFOF relationship, stood to earn larger profits from
increased market volatility. ¶¶ 358-59. Volatility is caused by both increases and decreases in a
stock price. The latter certainly occurred as a result of the trading restrictions. ¶¶ 199-208.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 25 of 47

19
platform for another broker dealer; (2) Robinhood could have shifted order ﬂow to other market
makers; and (3) Citadel Securities could have asked other retail broker dealers with which it had
a similar PFOF relationship to restrict trading. MTD at 21. Reliance on additional facts outside
the four corners the complaint is contrary to hornbook pleading principles and Rules 8 and 12.
Plaintiﬀs “need not rebut [Defendants’ asserted] reasons to defeat a motion to dismiss.” Salmon,
2021 WL 1109128, at *15. In any event, each of Defendants’ proﬀered alternative explanations
are speculative and without factual support. Moreover, they ﬂy in the face of Plaintiﬀs’ well
pleaded facts, which the Court must take as true. Id., at *9.21

๠e assertion that Retail Investors could have avoided the losses by trading on other
brokerages is at odds with allegations that the vast majority of Robinhood users were unable to
switch brokerages and locked in.22 ¶¶ 344-45. As Robinhood acknowledges, even if a customer
had set up another trading account—which is unrealistic and rare—funds transfers take days to
complete. ¶ 344. In addition, during the period in which the trading restrictions were imposed,
Robinhood users were able to deposit money into their Robinhood accounts, but were prohibited
from selling the securities they held in their Robinhood accounts and transfer the proceeds to
other platforms, further exacerbating the anticompetitive eﬀects. ¶ 345. Robinhood customers
who had an account with another brokerage company and were able to transfer funds were the
rare exception.23

21 Whether the restraint was innocent or not is a question of fact for the trier of fact to decide—
otherwise regular activity can still run afoul of the antitrust laws if done for an anticompetitive
result. See Disposable Contact Lens, 215 F. Supp. 3d at 1300 (Twombly does not “create a
presumption in favor of defendants acting in their lawful economic self-interest which Plaintiffs’
allegations must overcome in order to survive a motion to dismiss”); see also Jack Walters &
Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 709-10 (7th Cir. 1984) (conspiracies are
unlawful “if the conspirators used unlawful means to a lawful end or lawful means to an
unlawful end”) (citation omitted, italics added).
22 Indeed, Defendants’ first claim is at odds with their own arguments. Defendants assert that
other broker-dealers also “imposed similar restrictions” but now claim consumers could have
gone elsewhere to avoid the trading restrictions. In reversing themselves, Defendants at least
recognize that Robinhood’s restrictions were different and far more wide-ranging than those
imposed by other brokerages; indeed, Robinhood solely prohibited purchases for the full day on
January 28, 2021, and continued restrictions for days afterwards. ¶¶ 195, 368.
23 Retail Investors who were able to switch from Robinhood to another brokerage trading
platform (like Plaintiff Minahan) were only able to do so because of their remarkably high credit

Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 26 of 47

๠e assertion that Robinhood could have routed transactions away from Citadel to other
market makers—found nowhere in the Amended Complaint—fares no better. ๠ere is no
claim—and no allegation in the Amended Complaint—that Robinhood attempted to do so or did
so. Moreover, this claim disregards other allegations that Citadel Securities is the dominant
market maker, accounting for a signiﬁcant portion of all trades, thereby reducing the possibility
of alternatives. ¶¶ 48, 307-10. As demonstrated by publicly available data from the week of
January 25, 2021, the majority of dark pool transactions during the week of the restrictions were
attributable solely to Citadel Securities. ¶ 281. Simply put, other alternative market makers did
not have the capacity to route orders had Citadel Securities refused. Further, as discussed above,
routing away to other sources made little economic sense. Had Robinhood availed itself of
alternatives to Citadel, Robinhood would have foregone PFOF revenue, jeopardized its
“partnership” with Citadel Securities, and threatened the success of its impending IPO. ¶¶ 75, 82,
318.

๠ird, Defendants make the hypothetical assertion that Citadel Securities could have
coerced other broker dealers with similar PFOF relationships. ๠is allegation—also not found
anywhere in the Amended Complaint—is grasping at straws. It is entirely speculative, and again,
it discounts and ignores the fact that Robinhood was particularly vulnerable to Citadel
Securities’s demands.24 ¶ 75 (Robinhood relied on PFOF to sustain its business model). It is far
more plausible that Citadel Securities would be more eﬀectively able to leverage its relationship
with Robinhood as opposed to other broker dealers than the reverse, upon which Defendants
rely.25

scores and their liquidity which enabled them to transfer thousands of dollars to their new
accounts. ¶ 342. As noted, the median Robinhood user has $240 in her account, ¶ 343, a far cry
from the amounts needed to switch platforms rapidly enough to avoid or mitigate the damages
caused by the trading restrictions.
24 This was particularly true during the time in question as Robinhood was preparing for a highly
publicized initial public offering. A decrease in revenue would likely impact its IPO. ¶ 401.
25 Defendants’ claim also goes too far. Plaintiffs never claimed Citadel Securities wanted to
restrict all trading. Nor did Citadel Securities need to; it would (and did) substantially benefit by
reducing trading from Robinhood.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 27 of 47

21
B.
Plaintiﬀs Plausibly Plead an Unreasonable Restraint on Trade
i.
The Court Should Not Determine at the Motion to Dismiss Stage
Whether to Apply Per Se or Rule of Reason Treatment

๠e rule of reason is the basic standard for determining violations of the Sherman Act’s
restraint of trade provision. See Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877,
885 (2007). (citation omitted). Under this rule, the factﬁnder, considering such factors as the
restraint’s history, nature and eﬀect, “weighs all of the circumstances of a case in deciding
whether a restrictive practice should be prohibited as imposing an unreasonable restraint on
competition.” Id. at 885-86 (citations omitted). But the “rule of reason does not govern all
restraints,” id. at 886, some types of agreements are “so plainly anticompetitive that no elaborate
study of the industry is needed to establish their illegality.” Procaps S.A. v. Patheon, Inc., 845
F.3d 1072, 1083 (11th Cir. 2016) (citation omitted). ๠ese agreements “‘are deemed unlawful per
se.’” Leegin, 551 U.S. at 886 (quoting State Oil Co. v. Khan, 522 U.S. 3, 10 (1957)).

Determination of the standard to be applied to a restraint depends on the facts.
Sometimes, there are “numerous factual questions underpinning that purely legal decision.” In re
Blue Cross Blue Shield Antitrust Litig., 26 F. Supp. 3d 1172, 1186 (N.D. Ala. 2014). To decide
upon “[t]he true test of legality . . . the court must ordinarily consider the facts peculiar to the
business to which the restraint is applied; its condition before and after the restraint was
imposed; the nature of the restraint and its eﬀect, actual or probable.” Id., citing Cont’l T.V., Inc.
v. GTE Sylvania, Inc., 433 U.S. 36, 49 n. 15 (1977). No “bright line separates per se from rule of
reason analysis.” Id. at 1185 (citing Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of
Okla., 468 U.S. 85, 104, n.26 (1984)) (internal punctuations omitted); see also In re High-Tech
Emp. Antitrust Litig., 856 F. Supp. 2d 1103, 1115 n.16, 1122 (N.D. Cal. 2012) (“the court need
not decide now whether per se or rule of reason analysis applies. Indeed, that decision is more
appropriate on a motion for summary judgment.”); 2 Areeda & Hovenkamp, Antitrust Law 264
¶ 305(e) (“Often, however, the decision about which rule is to be employed will await facts that
are discovered only in discovery.”). “Discovery will elucidate whether the purported conspiracy
as a whole is patently anticompetitive ‘such as would always or almost always tend to restrict
competition and decrease output.’” Mallinckrodt ARD, 360 F. Supp. 3d at 754 (citations omitted).

๠erefore, the issue of whether the per se rule or rule of reason treatment will apply is not
ripe for consideration on a Rule 12(b)(6) motion. See, e.g., Hunter v. Booz Allen Hamilton, Inc.,
418 F. Supp. 3d 214, 222 (S.D. Ohio 2019) (declining to determine which standard applies at
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 28 of 47

22
motion to dismiss stage). Indeed, “the court just needs to determine whether the class plaintiﬀs
have alleged a plausible conspiracy under the antitrust laws.” In re EpiPen (Epinephrine
Injection, USP) Mktg., Sales Pracs., & Antitrust Litig., 336 F. Supp. 3d 1256, 1297, n.8 (D. Kan.
2018). “[T]he court need not decide what rule to apply to analyze the reasonableness of the
alleged restraints of trade supporting the class plaintiﬀs’ conspiracy claims” at the pleading stage.
Id. Plaintiﬀs have alleged a plausible conspiracy under the antitrust laws. At this early stage of
litigation, the Court should defer making a determination as to whether the per se rule or the rule
of reason standard applies to the instant claim until after the facts can be more fully developed in
discovery. See High-Tech Emp, 856 F. Supp. 2d at 1115 n.9, 1122 (application of per se or rule of
reason standard more appropriate at summary judgment).
ii.
Alternatively, the Court Should Find that the Agreement Qualifies for
Per Se Treatment

Under Section 1 of the Sherman Act, the per se rule applies to agreements “so plainly
anticompetitive that no elaborate study of the industry is needed to establish their illegality.”
Procaps, 845 F.3d at 1083 (quoting Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679,
692 (1978)). To evaluate whether conduct is properly analyzed under the per se framework, the
court “must inquire into whether the restraint, on its face, is a naked restraint of trade that always
or almost always tends to restrict output, or an ancillary restraint that results in an eﬃciency
enhancing integration among the parties to the agreement.” In re Terazosin Hydrochloride
Antitrust Litig., 352 F. Supp 2d 1279, 1314 (S.D. Fla. 2005) (citations omitted). Here, the
agreement between Citadel Securities and Robinhood was a naked restraint that, inter alia,
reduced output and a degradation of brokerage services. “By colluding to prohibit Retail
Investors from purchasing (but not selling) the Relevant Securities, Defendants harmed the very
competitive mechanism that sets the market price through the forces of supply and demand . . . .”
¶ 354. ๠is is a textbook restriction on output susceptible to per se treatment.

“Restraints imposed by agreement between competitors have traditionally been
denominated as horizontal restraints, and those imposed by agreement between ﬁrms at diﬀerent
levels of distribution as vertical restraints.” Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S.
717, 730 (1988). “With limited exceptions, horizontal agreements are per se unlawful,
whereas vertical restraints are unlawful only if an assessment of market eﬀects, known as the
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 29 of 47

23
‘rule of reason’ analysis, reveals that the vertical agreements unreasonably restrain trade.” 26
Disposable Contact Lens, 215 F. Supp. at 1291 (citing Leegin, 551 U.S. at 885-86, 907).
iii.
Plaintiffs Have Established a Conspiracy Under the “Quick Look”
Approach and the Rule of Reason

Even if the Court were to ﬁnd that the restraint here is not illegal per se, Plaintiﬀs’ claims
should be evaluated under the “quick look” approach. Under the “quick look” approach the court
inquires whether defendants’ conduct is of the type that, while not per se illegal, appears so
likely to have anticompetitive eﬀects that it is unnecessary for a court to apply the full rule of
reason analysis.27 An alleged restraint, “while not unambiguously in the per se category, may
require no more than cursory examination to establish that their principal or only eﬀect is
anticompetitive.” California ex rel. Harris v. Safeway, Inc., 651 F.3d 1118, 1134 (9th Cir. 2011)
(en banc) (quoting Cal. Dental Ass’n, 526 U.S. at 763) (the rule of reason analysis can be applied
“‘in the twinkling on an eye’”). Here, Plaintiﬀs allege that Defendants entered into an
unprecedented agreement to restrict Retail Investors from purchasing shares of the Relevant
Securities resulting in, inter alia, a reduction in output and a degradation in quality in brokerage
services. ¶¶ 350-56. Plaintiﬀs have alleged in detail the anticompetitive eﬀects of this restraint
with speciﬁcity in the no-commission securities services market. On the other hand, Defendants’
motion is devoid of any contention that the trading restrictions were procompetitive. Even if
Defendants’ agreement to foreclose Retail Investors from purchasing the Relevant Securities is

26 Citadel Securities is in the business of taking routed orders and settling them. Citadel
Securities is therefore on the same horizontal level of distribution as clearing entities such as
Robinhood Securities (Robinhood’s clearing entity). This horizontal relationship is of equal-or-
greater significance than other aspects which may be considered vertical in nature. In any event,
the difficulty of classifying the relationships as one or the other—or both—reinforces Plaintiffs’
position that it is premature to determine whether the per se rule or rule of reason applies. Cf.
Battle, 673 F.2d at 990 (“(H)orizantal plurality is not the real determinant of per se
unreasonableness. The essence of a violation of section 1 of the Sherman Act is agreement to
pursue illegal conduct. A combination to cut a retailer off from a source of supply is not any less
an illegal agreement because only one, rather than a plurality, of the parties is on the affected
level.”) (citation omitted).
27 See Cal. Dental Ass’n v. Fed. Trade Comm’n, 526 U.S. 756, 770 (1999) (“[A]n observer with
even a rudimentary understanding of economics could conclude that the arrangements in
question would have an anticompetitive effect on customers and markets”); see also Areeda &
Hovenkamp, ¶ 1911a (“What [the ‘quick-look’] term is intended to connote is that a certain class
of restraints, while not unambiguously in the per se category, may require no more than cursory
examination to establish that their principal or only effect is anticompetitive.”).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 30 of 47

24
not per se unlawful, it can readily be determined unlawful under the “quick look” analysis. Cal.
Dental Ass’n, 526 U.S. at 770.
iv.
Plaintiffs’ allegations suffice under the rule of reason

Even if the Court were to determine that the restraint should be evaluated under the rule
of reason, Plaintiﬀs’ allegations are suﬃcient to state a claim. In the Eleventh Circuit, in addition
to the proof of agreement, causation and damages, a plaintiﬀ must ordinarily prove “(1) the
anticompetitive eﬀect of the defendant’s conduct on the relevant market, and (2) that the
defendant’s conduct has no pro-competitive beneﬁt or justiﬁcation.” 28 Spanish Broad. Sys. of
Fla. v. Clear Channel Commc’ns., 376 F.3d 1065, 1071 (11th Cir. 2004) (citing Levine, 72 F.3d
at 1551). Once a plaintiﬀ shows anticompetitive eﬀect, the burden shirts to the defendant to show
procompetitive justiﬁcations. Lucasys Inc. v. PowerPlan, Inc., No. 20-cv-2987, 2021 WL
5279391, at *11 (N.D. Ga. Sep. 30, 2021) (citing Amex, 138 S. Ct. at 2284). At the pleading
stage, however, it is typically suﬃcient that the plaintiﬀ plausibly alleges anticompetitive
eﬀects—pleading the lack of procompetitive beneﬁts is not required. Geneva Pharms. Tech.
Corp. v. Barr Labs. Inc., 386 F.3d 485, 506-507 (2d Cir. 2004) Plaintiﬀs do not bear the burden
of pleading the absence of defenses to their claims.

Plaintiﬀs have satisﬁed their pleading burden of anticompetitive eﬀects by pleading facts
which constitute both direct and indirect proof of anticompetitive eﬀects. It is settled law that
Plaintiﬀs can show anticompetitive eﬀects by either means. Amex, 138 S. Ct. at 2284 (“๠e
plaintiﬀs can make this showing directly or indirectly.”) (citations omitted). Direct proof of
anticompetitive eﬀects includes “proof of actual detrimental eﬀects on competition, such as
reduced output, increased prices, or decreased quality in the relevant market.” Id. Plaintiﬀs may
also establish anticompetitive eﬀects indirectly by showing that the defendant has “suﬃcient
market power to cause an adverse eﬀect on competition.” Tops Mkts. Inc. v. Quality Mkts. Inc.,
142 F.3d 90, 96 (2d Cir. 1998). Plaintiﬀs plead suﬃcient facts as to both.

28 While Plaintiffs dispute that the relationship between Defendants is a vertical restraint. Such a
restraint “imposed by agreement between firms at different levels of distribution” are typically
assessed under the rule of reason. See Ohio v. Am. Express Co., 138 S. Ct. 2274, 2284 (2018)
(“Amex”) (quoting Bus. Elecs. Corp., 485 U.S. at 730).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 31 of 47

25
a.
The Amended Complaint Defines a Relevant Market

Generally, establishing the parameters of a relevant market requires a fact intensive
analysis unsuitable for resolution on a Rule 12(b)(6) motion. Id.; see also Spanish Broad. Sys.,
376 F.3d at 1070 (“Rule 12(b)(6) dismissals are particularly disfavored in fact-intensive antitrust
cases.”); Todd v. Exxon Corp., 275 F.3d 191, 199-200 (2d Cir. 2001) (“Because market deﬁnition
is a deeply fact-intensive inquiry, courts hesitate to grant motions to dismiss for failure to plead a
relevant product market.”). ๠ere is no requirement that the market deﬁnition elements of an
antitrust claim be pled with speciﬁcity. See Newcal Indus., Inc. v. Ikon Oﬃce Sol., 513 F.3d 1038,
1045 (9th Cir. 2008); see also Swierkiewicz, 534 U.S. at 513 (Rule 8 does not require heightened
pleading standard); Leatherman, 507 U.S. at 168 (same).

Plaintiﬀs plead suﬃcient facts regarding the relevant market in which the anticompetitive
harm occurred. See Jacobs, 626 F.3d at 1336. Under Twombly, a plaintiﬀ must simply allege
enough information to “plausibly suggest the contours of the relevant geographic and product
markets.” Id. (citations omitted). Plaintiﬀs have alleged the relevant geography and features with
requisite speciﬁcity.29 Plaintiﬀs allege—and Defendants do not challenge—that the relevant
geographic market is the United States. See ¶¶ 310–311, 315. Plaintiﬀs allege that the relevant
product market is the market for securities trading services. ¶¶ 305–15. ๠e Amended Complaint
provides ample detail of the features of the market which plausibly suggest its contours.

๠e business relationships and economic intentions of participants in the market for
securities trading services is complex. It has two signiﬁcant features, as understood by

29 Defendants challenge the relevant market by contending that it fails to consider
interchangeability. MTD at 25, n.19 (citing Jacobs, 626 F.3d at 1337-38). Specifically,
Defendants argue that Plaintiffs cannot contend that “retail brokers who do not have a ‘user-
friendly’ mobile app[,]’ […] have account minimums or charge commissions do not compete
with those in [the] “No-Fee Brokerage Trading App Market.” Id. But the unique characteristics
of the relevant market and the type of users it attracts speaks volumes. See U.S. Anchor Mfg., Inc.
v. Rule Indus., Inc., 7 F.3d 986, 995 (11th Cir. 1993) (relevant product market can exist as distinct
subset of larger product market, the boundaries of which may be determined by product’s
characteristics and distinct customers). Given the fact that the “median Robinhood customer
holds an account balance of approximately $240 (¶ 314), a brokerage firm with a desktop-only
application that charges a transaction fee per trade and that requires a $2,000 account minimum
is no substitute for a brokerage firm that requires no account minimum and that allows users to
trade for free by simply tapping a button on their cell phone.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 32 of 47

26
economists. ๠ere is a market which consumers directly experience, which for ease of reference
Plaintiﬀs refer to as the “No-Fee Brokerage Trading App Market”30 See ¶¶ 312-14.

Brokerages, like Robinhood, compete to attract customers to their platform. ๠e No-Fee
Brokerage Trading App Market can be considered a “downstream” market because it is the one
where products are sold or consumed by consumers and which they experience directly. See ¶
312. It is the market in which Robinhood promotes its commission-free trading services and
where it competes for customers with other ﬁrms which promote and sell similar services.31 As
Plaintiﬀs allege, Defendants caused anticompetitive harm in two distinct ways. First, Defendants,
through the restraint, eliminated trading with respect to the Relevant Securities and thereby
reduced output of trading services. Second, they thereby caused a reduction in quality of those
services.32 See Part IV.B.iv.b., infra. Reduction in output and reduction in quality are each classic
paradigmatic types of anticompetitive harm. See Amex, 138 S. Ct. at 2284.

๠e No-Fee Brokerage Trading App Market is linked to and directly inﬂuenced by the
PFOF Market controlled by Citadel Securities. ¶ 305. ๠is can be considered an “upstream”
market because it operates apart from consumers without consumer visibility and serves to
facilitate the No-Fee Brokerage Trade App Market. It is integral to Plaintiﬀs’ claims because
Robinhood’s business model and ability to oﬀer no-fee trades is contingent on PFOF, and Citadel
Securities is Robinhood’s most important business partner with respect to PFOF. ¶ 5. Citadel
Securities, the largest market maker, provides revenue to Robinhood for directing order ﬂow to

30 Particularly today, consumers buying or selling securities rely on brokerages and other market
participants to conduct securities transactions and to provide related services. Consumers directly
buy and sell publicly traded securities from other consumers through brokerages like Robinhood.
When securities are traded electronically, brokerages and other firms like Citadel deal with each
other to accomplish such transactions.
31 Indeed, Defendants admit to this market when they—wrongly—argue that Plaintiffs could
have avoided the anticompetitive harm they caused by using other brokers.
32 This is supported by Defendants’ own characterizations. See, e.g., MTD at 4 (“Robinhood
Financial is a customer-facing, introducing broker-dealer through which retail investors can
place commission-free trade orders”).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 33 of 47

27
Citadel Securities. ¶¶ 313, 316, 318. Functionally, these upstream and downstream markets
operate together with respect to the trading of securities.33 See ¶ 305.

Defendants’ contention that Plaintiﬀs “gerrymandered segregated markets” is not a
proper basis for a Rule 12 motion. At most, it amounts to a factual dispute, which will be the
subject of discovery, expert analysis and resolution by the trier of fact. Moreover, Defendants’
characterization is wrong. It ignores the facts plaintiﬀs allege. ๠e two aspects of the market
Plaintiﬀs describe are consistent with Defendants’ own description of their respective business
models. See MTD at 5. Far from being “manufacture[d]” as Defendants suggest (MTD at 25,
n.19), the allegations accurately reﬂect the market and Defendants’ roles in it.34

Defendants counter Plaintiﬀs’ allegations regarding the relevant market with allegations
of their own. Defendants assert the existence of another market, the “market for the Relevant
Securities.” MTD at 26. Here too Defendants’ allegations are untethered to the Amended
Complaint, and are therefore improper. Vernon v. Med. Mgmt. Assocs. of Margate, Inc., 912 F.
Supp. 1549, 1553 (S.D. Fla. 1996) (“analysis of a 12(b)(6) motion is limited primarily to the face
of the complaint and attachments thereto”). In any event, Defendants misconstrue the concepts of
“upstream” and “downstream” markets in economics and antitrust law. ๠e fact that there are
downstream features of the market, which consumers directly experience, and upstream features,
which they do not, does not diminish the suﬃciency of the allegations for pleadings purposes.
Consumers never deal directly with market makers such as Citadel Securities but must transact
through consumer-facing brokerages such as Robinhood. Cf. Apple, Inc. v. Pepper, 139 S. Ct.
1514, 1521-24 (2019) (direct purchaser standing for downstream purchasers of apps from app
store). Together, they facilitate consumer transactions in securities, and as explained infra, their

33 These detailed allegations are sufficient for pleading purpose. They set forth in more than
adequate detail the nature of the business relationships. Pleading requirements for relevant
antitrust markets are generalized. Requiring plaintiffs to plead more detail would incorrectly
raise the pleading requirements akin to the particularized requirements under Rule 9. There is no
particularized pleading requirement for antitrust cases. Leatherman, 507 U.S. at 168 (“Rule
8(a)(2) requires only a ‘short and plain statement of the claim showing that the pleader is entitled
to relief.’”); Palm Beach Golf Ctr-Boca, Inc. v. Sarris, 781 F.3d 1245, 1260 (11th Cir. 2015)
(concluding Twombly did not overrule Swierkiewicz and Leatherman).
34 Defendants’ citation to Kalmanovitz v. G. Heilman Brewing Co., 769 F.2d 152, 156 (3d Cir.
1985) is unavailing. MTD at 26, n.20. As Kalmanovitz recognized, “system-wide abuses in the
securities industry have been held to have antitrust implications.” Id. at 157, n.5.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 34 of 47

28
interplay enabled the injury to competition. Plaintiﬀs’ allegations not only inform the relevant
market, they demonstrate their plausibility.
b.
Plaintiffs Sufficiently Plead Anticompetitive Effects in the
Relevant Market

Anticompetitive eﬀects can be shown in two ways. ๠ey can be shown directly by “proof
of actual detrimental eﬀects on competition.” Amex, 138 S. Ct. at 2284 (internal quotation marks
and citations omitted). ๠ey can also be shown indirectly, by “proof of market power plus some
evidence that the challenged restraint harms competition.” Id. (citations omitted); see also
Levine, 72 F.3d at 1551 (“plaintiﬀ may either prove that the defendants’ behavior had an ‘actual
detrimental eﬀect’ on competition, or that the behavior had ‘the potential for genuine adverse
eﬀects on competition.’”) (citations omitted). Plaintiﬀs plead suﬃcient facts as to each.

Proof of actual detrimental eﬀects on competition includes, but is not limited to, “reduced
output, increased prices, or decreased quality in the relevant market[.]” Amex, 138 S. Ct. at 2284
(citations omitted); Jacobs, 626 F.3d at 1339 (same). Plaintiﬀs have adequately pled
paradigmatic detrimental eﬀects. Evidence of restricted output is “direct proof of the injury to
competition which a competitor with market power may inﬂict, and thus, of the actual exercise
of market power.” Rebel Oil Co., Inc. v. Atl. Richﬁeld Co., 51 F.3d 1421, 1434 (9th Cir. 1995);
see Toys “R” Us, Inc. v. Fed. Trade Comm’n, 221 F.3d 928, 937 (7th Cir. 2000) (defendant’s
ability to restrict output proof of market power).35 First, Robinhood, pursuant to its agreement
with Citadel, reduced output. ¶¶ 254, 264. Indeed, that was the very purpose—and actual
result—of the agreement. It was Robinhood’s business to provide brokerage services free of
commissions. ¶ 8. By restricting trading, the agreement denied customers those services.36 ¶ 354.
Second, it also subverted consumer choice by inhibiting consumers’ ability to trade the Relevant
Securities, thereby diminishing the quality of the transactions. ¶ 350. ๠ird, Defendants’ actions

35 See also Fed. Trade Comm’n v. Ind. Fed’n of Dentists, 476 U.S. 447, 456-57 (1986) (using
direct evidence to conclude challenged conduct “impairs the ability of the market to advance
social welfare by ensuring the provision of desired goods and services to consumers at a price
approximating the marginal cost of providing them”); United States v. Microsoft Corp., 253 F.3d
34, 57 (stating that if “evidence indicates that a firm has in fact” profitably raised prices
substantially above competitive level, “the existence of monopoly power is clear”).
36 This meant that the price at which the Relevant Securities could be sold no longer reflected the
actual, competitive market price set through supply and demand. ¶ 354. By restricting output
(brokerage services), there was a reduced supply of willing buyers of the Relevant Securities,
resulting in reduced prices in the Relevant Securities.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 35 of 47

29
distorted the pricing of the Relevant Securities. Rather than permitting the price discovery that
would have occurred through the operation of supply and demand, Defendants interfered with
the functioning of the market. In addition to beneﬁting them directly—by allowing Citadel
Securities exit their short positions—this was a detriment to both competition and consumers.
¶¶ 350–56. ๠ese are actual detrimental eﬀects on competition that the antitrust law prohibits.
See Ind. Fed’n of Dentists, 476 U.S. at 460 (“‘proof of actual detrimental eﬀects, such as a
reduction of output,’ can obviate the need for an inquiry into market power”) (quoting 7 Areeda,
Antitrust Law ¶ 1511, p.429 (1986)); Costco, 2015 WL 9987969, at *11 (actual competitive
eﬀects include but are not limited to reduction of output, increase in price, or deterioration in
quality) (citing Jacobs, 626 F.3d at 1339).
1.
Robinhood and Citadel Securities Possess Power in the
Relevant Market

Plaintiﬀs adequately allege market power in the relevant market.37 ¶¶ 307–10, 324–36.
Plaintiﬀs allege Robinhood possesses a high market share. Robinhood pioneered the No-Fee
Brokerage Trading App Market and it remains the market leader in terms of market share. ¶ 324.
Robinhood maintains 18 million online accounts that are part of the No-Fee Trading App Market,
and Robinhood boasts a 50% market share of all new brokerage accounts. ¶¶ 325, 327. See
Jacobs, 626 F.3d at 1339 (market share frequently used interchangeably with market power.); see
also Costco, 2015 WL 9987969, at *13 (43% control of market suﬃcient market power for rule
of reason analysis). Indeed, Robinhood reports more daily online trades and more daily active
users than any of its largest rivals combined. ¶¶ 328–30. Further, few Robinhood users defected
even after Robinhood implemented the trading restrictions, underscoring its market power. ¶ 336.

Robinhood’s market power is also apparent due to the lock-in that consumers faced.
Indeed, it should be obvious that, if Robinhood did not have such power, the prohibition on
selling would have been unsuccessful, as consumers could have evaded it by trading elsewhere.
As Plaintiﬀs allege, many consumers, with few exceptions, were unable to switch brokerages
during the trading restrictions is strong evidence of Robinhood’s market power. See ¶¶ 337-42.

37 Tellingly, Defendants do not directly challenge Plaintiffs’ allegations of market power.
Defendants only make the conclusory claim that should Plaintiffs’ claims proceed beyond the
pleadings—and they should—that Plaintiffs will be unable to prove market power. MTD at 22,
n.17. Ultimately, that is a question for the trier of fact, not Defendants.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 36 of 47

Robinhood’s market power was further buttressed by Citadel Securities’s market power
in the upstream market. Citadel Securities pays more to brokers for PFOF than any other market
maker. ¶ 308-10. Citadel Securities accounts for 27% of all U.S. equities volume and executing
nearly 37% of all U.S. listed retail securities trading volume (resulting in almost 40% of all
PFOF transactions in the United States) and transacts more PFOF orders than Robinhood’s three
other largest market maker competitors combined. ¶ 307. ๠e fact that Citadel Securities
accounted for over half of the dark pool activity in the Relevant Securities during the week of
January 25, 2021 is further support for these allegations. ¶ 282.
2.
Plaintiffs Have Shown Defendants Harmed Competition
in the Relevant Market

Plaintiﬀs further allege that Defendants’ conduct caused harm to competition. ๠rough
their conduct, enabled by the market power they possessed and wielded, Defendants harmed
competition by restraining consumer choice and artiﬁcially inﬂuencing the price of the Relevant
Securities. In so doing, they divorced the price of the Relevant Securities from the fundamental
economics of supply and demand. As described above, under conditions of competition, absent
collusion, the laws of supply and demand would have operated, allowing prices to rise. As a
result of Defendants’ collusion, these laws were distorted, supply from willing sellers was
reduced, and prices went down. Further, the scheme also had the detrimental eﬀect of reducing
the output of trades and reducing the quality of transactions. ¶¶ 350–56; see Part IV.B.iv.b, supra.

In addition, as Plaintiﬀs allege, Robinhood relied on PFOF from Citadel Securities, and
Robinhood could not jeopardize that revenue stream, particularly given the imminent deadlines
associated with its IPO. Exercising such leverage to obtain a restriction in trading is a form of
bribery, prohibited by the antitrust laws. See In re EpiPen Direct Purchaser Litig., No. 20-cv-
0827, 2021 WL 147166, at *24-25 (D. Minn. Jan. 15, 2021). Harm resulting from such bribery is
harm to competition. Bribery can reduce or eliminate market functions and thereby cause
anticompetitive harm. In particular, “bribery can be anticompetitive when it ‘rob[s] the ultimate
purchaser of the opportunity to choose [a] product.’” Id. (citation omitted); see also id.
(collecting cases). Here, as Plaintiﬀs allege, Citadel Securities used its market power and control
of Robinhood’s PFOF to pressure Robinhood into acting against both its own interest and the
interest of consumers. ๠is conduct by Defendants was inherently anticompetitive. ¶ 352.

Plaintiﬀs further allege that Defendants’ conduct led to a rise in transaction costs, even if
the underlying security’s value went down in price, ¶ 353. In re NASDAQ Mkt-Makers Antitrust
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 37 of 47

31
Litig., 172 F.R.D. 119, 125-26 (S.D.N.Y. 1997) (“common proof that the conspiracy” “did have a
general eﬀect on the transactions costs borne by institutional investors.”); see also United States
v. Alex. Brown & Sons, 963 F. Supp. 235, 237 (S.D.N.Y. 1997) (higher transaction costs for
investors due to Defendants’ collusion).

Defendants do not dispute that these allegations plausibly allege harm to competition. In
fact, Defendants appear to concede that Plaintiﬀs’ allegations constitute competitive harm. See,
e.g., MTD at 26 (allegations that Retail Investors sold below prices they would have otherwise
obtained “is an allegation of harm in the market [ ] for trading the Relevant Securities.”).

Instead, Defendants attempt to misdirect the focus instead on competition between
Robinhood and the other brokerage services for customers or between Citadel Securities and
other market makers. MTD at 25. First, this is inconsistent with the basic focus of the antitrust
laws. See 2301 M Cinema LLC v. Silver Cinemas Acquisition Co., 342 F. Supp. 3d 126, 137
(D.D.C. 2018) (“the antitrust laws ‘were enacted for the “protection of competition, not
competitors”’”) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 4298 U.S. 477, 489
(1977)) (italics in original).

Second, Defendants do so based on a third, entirely separate product market divorced
from the allegations. MTD at 26. ๠is is improper for pleading purposes. See Vernon, 912 F.
Supp. at 1553. It ignores Plaintiﬀs’ speciﬁc allegations of the relevant market. See Part IV,B.iv.a,
supra. Defendants’ attempt to analyze anticompetitive harm in a third market is of their own
design is an attempt to muddy the waters. Defendants wrongfully contend that Plaintiﬀs alleged
harm is “all premised on a decline in the price of the Relevant Securities.” MTD 26. As
explained above, this is incorrect.38 See Part IV.B.iv.b., supra; see also ¶¶ 350–356. When the
prices of the Relevant Securities dropped due to Defendants’ scheme, Retail Investors sold the
Relevant Securities at lower prices—the precise result Defendants desired.39 ¶¶ 27, 32, 37, 41.

38 The harm Plaintiffs incurred took the form of reduced brokerage services which is what
Robinhood offered to consumers. The harm can be estimated by the amount lost when Plaintiffs
were unable to sell the Relevant Securities due to the trading restrictions.
39Defendants’ reliance on Maris misses the mark. MTD at 27 (citing Maris Distrib. Co. v.
Anheuser-Busch, Inc., 302 F.3d 1207 (11th Cir. 2002). In Maris, the Eleventh Circuit upheld the
district court’s decision that Anheuser-Busch’s market share in beer manufacturing (a separate
market) could not imputed to the relevant market. Id. at 1210, 1224. But nowhere in the Maris

Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 38 of 47

Defendants ﬁnally contend that “the markets in which Citadel Securities and Robinhood
operate are not within the area of eﬀective competition between the defendant and plaintiﬀ’”
such that there are “no allegations that the conduct at issue here harmed competition in either of
the relevant markets.” MTD at 27 (citing Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1353
(Fed. Cir. 1999)). Defendants’ argument is puzzling. Plaintiﬀs are purchasers of securities trading
services. ๠ey do not contend they compete with Defendants, nor do they need to.
V.
Plaintiffs’ Claims Are Not Preempted by the Federal Securities’ Law

Plaintiﬀs’ antitrust claims are not preempted, see Credit Suisse Securities (USA) LLC v.
Billing, 551 U.S. 264 (2007), because the Dodd-Frank Act’s Antitrust Savings Clause applies to
Plaintiﬀs’ claims. All of Defendants’ citations to support preclusion predate Dodd-Frank’s
passage into law. Further, Defendants’ reliance on the SEC Staﬀ Report40 is misplaced.
A.
Dodd-Frank Act’s Antitrust Savings Clause Applies to Plaintiﬀs’ Claims

In passing the Dodd-Frank Act, Congress amended the Securities Exchange Act of 1934
by adding provisions regarding, inter alia, short sales. Congress included an expansive Antitrust
Savings Clause making clear that antitrust claims with respect to the matters addressed in the
legislation were not precluded. Section 6 of the Dodd-Frank Act, 12 U.S.C. § 5303, states that
“nothing in this Act, or any amendment made by this Act, shall be construed to modify, impair,
or supersede the operation of any of the antitrust laws, unless otherwise speciﬁed” (the “Antirust
Savings Clause”). ๠is is fatal to Defendants’ preclusion argument.41

opinion is a discussion or analysis of an antitrust injury occurring in the defined market. Further,
Maris recognized that market power only as a means to “indirectly” show proof of
anticompetitive effects—the plaintiff was permitted to show a jury “direct[ ]” proof of actual
anticompetitive effects. Id. at 1212. Here, Plaintiffs adequately allege proof of anticompetitive
effects both directly and indirectly. ¶¶ 307–11, 324–46, 350–56. Defendants’ citation to
Universal Grading Serv. v. eBay, Inc., No. C-09-2755-RMW, 2012 WL 70644 (N.D. Cal. Jan. 9,
2012), is likewise off target. MTD at 27. The section on which Defendants rely involves a
Section 2 claim against a noncompetitor. Id., at *8-9. No such issue is before the Court.
40 SEC, Staff Report on Equity and Options Market Structure Conditions in Early 2021 (October
14, 2021), available at https://www.sec.gov/files/staff-report-equity-options-market-struction-
conditions-early-2021.pdf. (the “SEC Staff Report”).
41 “In attempting to elaborate on the effect of an antitrust savings clause, it does not create a
different rule, but merely reaffirms the general rule. Moreover, an antitrust savings clause is itself
merely a reinforcement of the well-established principle that, because the antitrust laws are ‘a

Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 39 of 47

Dodd-Frank implemented broad provisions that directly touch upon issues alleged in the
Amended Complaint. Section 929X of Dodd-Frank empowered the SEC to promulgate rules
related to public disclosure of short positions, albeit the SEC has not promulgated any such rules.
¶¶ 302-03. Dodd-Frank amended the Exchange Act regarding certain transactions related to short
sales. 1242 Stat. 1870. Dodd-Frank also has speciﬁc provisions related to market making. E.g.,
1242 Stat. at 1624, 1632. Defendants’ conduct falls squarely within Dodd-Frank’s ambit.42
๠at the statute did not preclude antitrust is conﬁrmed by the legislative history. As
Representative Conyers, the Chairman of the House Judiciary Committee, stated:
The final bill contains a number of provisions to ensure that the antitrust laws
remain fully in effect. . . . First and foremost is the antitrust savings clause in
section 6 of the bill. It is the standard antitrust savings clause found in other
statutes. It applies to the entire Act, and all amendments made by the Act to other
laws.
156 CONG. REC. E1347-01 (2010), 2010 WL 2788137 (“Conyers Remarks”).

Defendants assert that the Dodd-Frank Act did not amend Section 15 of the Exchange
Act. MTD at 34, n.24. Not so. Section 913(g) of the Dodd-Frank act modiﬁed “Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o)” by adding additional language that permits the
SEC to promulgate rules regarding ﬁduciary standards and disclosure requirements for brokers.
See Dodd-Frank Act § 913(g), 124 Stat. at 1828.

Moreover, Dodd-Frank preserved the applicability of the antitrust laws to matters within
the scope of the Act except where “otherwise speciﬁed” and Congress expressly indicated where
the antitrust laws were modiﬁed. “Dodd-Frank never mentions the Sherman Act . . . , and it
explicitly modiﬁes the Clayton Act in four provisions, none of which is relevant here. See 12
U.S.C. §§ 1843(k)(6)(B)(iii), 5363(b)(5), 5390(a)(1)(G)(ii), 5390(h)(11). ๠ese are the four
provisions captured by the ‘unless otherwise speciﬁed’ exception to the antitrust savings

comprehensive charter of economic liberty aimed at preserving free and unfettered competition,’
there is a strong presumption against their normal operation being superseded by some other
statutory scheme.” 156 CONG. REC. E1347-01 (2010), 2010 WL 2788137 (citations and internal
quotations marks omitted).
42 Whether the underlying conduct, here short sales, are permitted under Dodd-Frank is of no
concern for antitrust purposes. See ES Dev., Inc. v. RWM Enters., Inc., 939 F.2d 547, 555 (8th
Cir. 1991) (“The present case provides a further example of the antitrust maxim that ‘even an
otherwise lawful device may be used as a weapon in restraint of trade.’”) (quoting Schine Chain
Theatres, Inc. v. United States, 334 U.S. 110, 119 (1948)).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 40 of 47

34
clause.”43 In re Credit Default Swaps Antitrust Litig., No. 13md2476 (DLC), 2014 WL 4379112,
at *16 (S.D.N.Y. Sept. 4, 2014); accord In re Interest Rate Swaps Antitrust Litig., 261 F. Supp. 3d
430, 497 (S.D.N.Y. 2017) (same). ๠e legislative history indicates that Congress intended Dodd-
Frank to only modify those speciﬁc provisions of the antitrust law. Conyers Remarks, at E1347
(“๠e phrase ‘unless otherwise speciﬁed’ refers only to those four speciﬁc provisions that
explicitly modify the operation of those speciﬁed provisions of the antitrust laws in speciﬁed
ways and is not a basis for courts to consider whether any other provision in the bill might be
intended as an implicit modiﬁcation of how the antitrust laws operate. ๠e savings clause is
intended to make clear that it is not.”). ๠e conclusion is inescapable that Congress intended for
the antitrust laws to apply to short sales. See Interest Rate Swaps, 261 F. Supp. 3d at 497 (“As a
matter of plain language, the exception to Dodd-Frank’s clause preserving plaintiﬀs’ right to
bring antitrust claims is not implicated here.”).

Billing is inapposite here. Billing applies “[w]here regulatory statutes are silent with
respect to antitrust.” 551 U.S. 264 at 271 (2007) (emphasis added). Here, however, the statute is
not silent. It addresses the commerce giving rise to Plaintiﬀs’ claims and, in addition, it provides
that the reach of the antitrust laws with respect to them is preserved. Further, none of the cases
Defendants cite in support of preemption post-date Dodd-Frank. “When Congress has spoken,
the Supreme Court stated, a court is to apply Congress’s command as to the extent, if any, to
which antitrust laws are abrogated.” See In re Interest Rate Swaps, 261 F. Supp. 3d at 496-97
(citing Verizon Commc’ns, Inc. v. Law Oﬀs. of Curtis V. Trinko, LLP, 540 U.S. 398, 406–07
(2004) (analyzing the antitrust savings clause of the Telecommunications Act)). As such, the
Antirust Savings Clause applies, and Plaintiﬀs’ claims under the Sherman Act are not precluded.
B.
๠e Billing Factors Weigh Against Preclusion of Plaintiﬀs’ Claims

Even if Billing applies—and it does not—Plaintiﬀs’ claims are not precluded by the
Exchange Act. ๠e “repeal of the antitrust laws by implication is not favored and not casually to
be allowed. Only where there is a ‘plain repugnancy between antitrust and regulatory provisions
will repeal be implied.’” Gordon v. N.Y. Stock Exch., Inc., 422 U.S. 659, 682 (1975) (citations
omitted, emphasis added). Courts should only ﬁnd the antitrust laws are precluded in narrow
speciﬁc circumstances. “Repeal of the antitrust laws is to be regarded as implied only if

43 The specified provisions relate to Hart-Scott-Rodino premerger review under the Clayton Act.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 41 of 47

35
necessary to make the [ ] Exchange Act work, and even then only to the minimum extent
necessary.”44 Billing, 551 U.S. at 271 (emphasis added, brackets and citation omitted). In Billing,
the Supreme Court identiﬁed four factors to determine whether antitrust claims are implicitly
precluded: (1) whether the action involves an area of conduct squarely within the heartland of
securities regulations; (2) clear and adequate SEC authority to regulate; (3) active and ongoing
agency regulation; and (4) a serious conﬂict between the antitrust and regulatory regimes. Id. at
285. Here, there is no “clear repugnancy” between antitrust laws and securities laws. ๠e fact
that anticompetitive conduct occurred with respect to the buying and selling of securities is
insuﬃcient to warrant preclusion. Each of the Billing factors weighs against preclusion here.
i.
The Underlying Conduct at Issue Is Not Central to the Functioning of
Well-Regulated Capital Markets

“To ascertain whether ‘the possible conﬂict’ between securities law and antitrust law
aﬀects ‘practices that lie squarely within an area of ﬁnancial market activity that the securities
law seeks to regulate,’ the Supreme Court looked to the broad underlying market activity.” Elec.
Trading Grp., LLC v. Banc of Am. Sec. LLC, 588 F.3d 128, 133 (2d Cir. 2009) (citing Billing, 551
U.S. at 276). In Billing, the Supreme Court considered how the IPO process (the underlying
market activity) was “central to the proper functioning of well-regulated capital markets.” Id., at
276. In concluding that it was, the Supreme Court addressed numerous beneﬁts of the IPO
process, including how it “supports new ﬁrms that seek to raise capital,” “helps spread
ownership,” and “directs capital ﬂow.” Id. ๠e Court also noted that many ﬁnancial experts
considered the joint underwriting activity at issue “essential to the successful marketing of an
IPO.” Id. Similarly, in determining that short selling (the underlying market activity) was an
“area of conduct squarely within the heartland of securities regulations,” the court in Elec.
Trading Grp., considered the “liquidity and pricing beneﬁt created by short sales.” 588 F.3d at
133-34 (citation omitted).

Defendants argue that the underlying activity here lies at the very heart of the securities
market because “[m]arket integrity” is “vital” and because brokers 0must “register with the
SEC” (MTD at 29), but Defendants do not—and cannot—demonstrate how cutting oﬀ retail
investors’ access to the securities market by restricting trading (let alone doing so in an

44 Antitrust laws have long been enforced with respect to wrongdoers in the securities market.
See, e.g., NASDAQ Mkt-Makers, 894 F. Supp. 703 (S.D.N.Y. 1995); see also Kalmanovitz, 769
F.2d at 157 (collecting cases where “antitrust laws have been applied to the securities industry”).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 42 of 47

36
unlawfully coordinated fashion) is “central to the proper functioning of well-regulated markets.”
Billing, 551 U.S. at 276. ๠us, this factor weighs against preclusion. See Kalmanovitz, 769 F.2d
at 156, n.5 (“abuses in the securities industry have been held to have antitrust implications”).
ii.
The SEC Is Not Authorized to Regulate the Activities in Question

๠e second Billing factor considers whether there is “clear and adequate SEC authority”
to regulate the activities in question. 551 U.S. at 285. In ascertaining “‘the existence of
regulatory authority under the securities law to supervise the activities in question . . . the
Supreme Court looked to the role of the [defendants] in the [underlying market activity].’” Elec.
Trading Grp., 588 F.3d at 134 (quoting Billing, 551 U.S. at 275-77).

๠e SEC does not have authority to supervise “all of the activities in question here,” and
in particular Robinhood’s imposed limitations on trading. Defendants’ reliance on general
regulations concerning fraudulent practices is insuﬃcient to close that gap. See MTD at 30-31
(citing Billing, 551 U.S. at 276). To argue otherwise is entirely misleading. In Billing, the
Supreme Court ﬁrst looked to whether the SEC possessed the power to supervise the activity in
question. Billing, 551 U.S. at 276-77. In ﬁnding that it did, the Supreme Court cited to speciﬁc
regulatory statutes governing the underwriter-defendants’ acts during the IPO process (the
underlying market activity), including book-building, solicitations of indications of interest, and
communications between underwriting participants and their customers. Billing, 551 U.S. at 276-
77 (citing 15 U.S.C. §§ 77(b)(a)(3), 77j, 77z-2). Only after the Supreme Court found that SEC
regulated the activity in question did it look to buttress the conclusion.

Here, Defendants refers to several regulations which provide no evidence that the SEC
has the authority to regulate the conduct at issue (i.e., Defendants’ collusive agreement to restrict
Retail Investors from purchasing the Relevant Securities). See MTD at 30 (citing 15 U.S.C. §
78o(c)(2) and 15 U.S.C. § 78j(b)).45 ๠e referenced regulations concern, inter alia, over-the-

45 Defendants’ citation to 15 U.S.C.§ 78o(b)(7) is also misplaced as this statute addresses
registration, training and qualification requirements for brokers, all of which are irrelevant here.
See MTD at 30.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 43 of 47

37
counter markets rules, record keeping requirements,46 standards for clearing agencies and
securities oﬀerings (i.e., IPOs). ๠ese are beside the point and irrelevant here.

Further, Defendants’ reliance on the SEC’s newly proposed rule regarding the settlement
period47 is misplaced. MTD at 30. ๠e proposed rule, at best, shows the SEC has authority to
supervise and mitigate risks associated with trade settlement. ๠is is a far cry from showing the
SEC has the authority to supervise all of the activities in question here, and in particular has no
direct relationship with Robinhood’s trading restrictions or related concerted activity.
iii.
The SEC Is Not Exercising its Authority over the Conduct at Issue

๠e third Billing factor considers “evidence that the responsible regulatory entities
exercise [their] authority.” Billing, 551 U.S. at 275. ๠ere is no such evidence. Defendants
instead refer to a handful of SEC regulations. MTD at 31. But these regulations, which are more
appropriately analyzed under the second Billing factor as described above, provide no evidence
that the SEC has been investigating or regulating the conduct at issue here (i.e., the Defendants’
collusive agreement to restrict Retail Investors from purchasing the Relevant Securities). As
mentioned in Part V.B.ii., supra, these are beside the point and irrelevant here. See MTD at 31;
see also 17 C.F.R. §§ 240.15c3-1 to -5; 17 C.F.R. §§ 240.17h-1T to -2T; Regulation M, 17
C.F.R.§§ 242.100 to -105. As addressed above, Defendants’ reliance on provisions of the
Exchange Act is also misplaced. See MTD at 31.

Defendants’ general reference to SEC enforcement programs (MTD at 31-32) is of no
moment. ๠ese programs were not created to address the conduct at issue. Defendants have not
been the target of such programs either. Defendants do not contend to the contrary. And, while
true that the SEC investigated the events concerning the market activities of January 28, 2021,
there is simply no evidence to suggest that the SEC investigated the claims of concerted activity

46 Disclosure-like oversight does not rise to the level of exercise of authority to satisfy the
elements in Billing. See Dahl v. Bain Capital Partners, LLC, 589 F. Supp. 2d 112, 116-17 (D.
Mass. 2008) (“seeing that the SEC only required certain disclosures here, and that it did not
substantively regulate the behavior in question, the second factor is not met.”).
47 See Shortening the Securities Transaction Settlement Cycle, Release No. 34-94196 (issued
February 9, 2022) (publication in Federal Register forthcoming) (to be codified at 17 C.F.R. pts.
232, 240, and 275), available at https://www.sec.gov/rules/proposed/2022/34-94196.pdf (the
“Proposed Rule”).
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 44 of 47

38
at issue here.48 See Mayor & City Council of Balt., Md. v. Citigroup, Inc., Nos. 08-cv-7746
(BSJ), 08-cv-7747 (BSJ), 2010 WL 430771, at *5 (S.D.N.Y. Jan. 26, 2010) (ﬁnding that the SEC
had “actively exercised its authority” by “undertak[ing] an ongoing investigation into the speciﬁc
events at issue in this case”) (emphasis added).

Not only do Defendants mischaracterize the target of the SEC’s investigation, but they
intentionally gloss over the fact that the Staﬀ Report has no precedential value. By its terms, the
Staﬀ Report expressly disclaims any legal or factual eﬀect on its cover page:
DISCLAIMER: This is a report of the Staff of the U.S. Securities and Exchange
Commission. Staff Reports, Investor Bulletins, and other staff documents
(including those cited herein) represent the views of Commission staff and are
not a rule, regulation, or statement of the Commission. The Commission has
neither approved nor disapproved the content of these documents and, like all
staff statements, they have no legal force or effect, do not alter or amend
applicable law, and create no new or additional obligations for any person. The
Commission has expressed no view regarding the analysis, findings, or
conclusions contained herein.
Staﬀ Report at 1 (emphasis added). ๠us, no legal conclusions can be drawn from the Staﬀ
Report, and it has no preclusive eﬀect with respect to any factual matter at issue here.49
iv.
There is No Conflict Between Antitrust and Securities Laws

๠e fourth Billing factor considers whether there is a “serious conﬂict between the
antitrust and regulatory regimes,” such that allowing “an antitrust lawsuit would threaten serious
harm to the eﬃcient functioning of the securities market.” Billing, 551 U.S. at 283, 385. A
conﬂict may occur when there is either an actual conﬂict or a potential conﬂict between antitrust
law and securities regulations. Elec. Trading Grp., 588 F.3d at 137-38.

48 SEC Chair Gary Gensler alluded to the SEC’s investigative focus in his Congressional testimony.
Notably, absent from Gensler’s testimony was any refence to Defendants’ alleged conspiratorial
conduct. Virtual Hearing – Game Stopped? Who Wins and Loses When Short Sellers, Social
Media, and Retail Investors Collide, Part III, 117th Cong. (May 6, 2021) (statement of Gary
Gensler, SEC Chairman), available at https://financialservices.house.gov/uploadedfiles/hhrg-117-
ba00-wstate-genslerg-20210506.pdf. The Court may take judicial notice of SEC statement because
it is a public record, the accuracy of which cannot be questioned. See Univ. Express, Inc. v. U.S.
Sec. Exchange Comm’n, 177 F. App’x 52, 53 (11th Cir. 2006).
49 To the extent that Defendants attempt to introduce the Staff Report as a means to show conflict
between the Securities Exchange Act and the Sherman Act, the Staff Report does no such thing
as, by its terms, it has “no legal force or effect.” Id.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 45 of 47

Far from creating suﬃcient harm, this antitrust lawsuit would create no harm at all.
Defendants cite to no law that would be in conﬂict with or undermined were Plaintiﬀs’ claims to
succeed. In ascertaining whether an actual conﬂict exists, the court in Elec. Trading Grp.
examined whether “[a]ntitrust liability would inhibit conduct that the SEC permits and that
assists the eﬃcient functioning of the [securities’] market.” Id. at 137. No such concern pertains
here. ๠e assertion that Defendants’ concerted activity is not prohibited in fact proves the
reverse, namely that the conduct is not subject to regulation. Further, there is no showing that
such conduct is permitted, authorized or encouraged by the SEC. Far from it.

To support their argument that an actual conﬂict exists because the “conduct at issue” is
“permitted by the SEC,” Defendants rely on an excerpted portion of an SEC investor alert, which
when read in full states:
Also, broker-dealers may reserve the ability to reject or limit customer
transactions. This may be done for legal, compliance, or risk management
reasons, and is typically discussed in the customer account agreement. In certain
circumstances, broker-dealers may determine not to accept orders where a
transaction presents certain associated compliance or legal risks.
MTD at 10. Defendants do not explain how these generalized descriptions authorize their
concerted activity. Moreover, the above language “is not a rule, regulation, or statement of the
[SEC],” but rather an “investor bulletin,” that has not been “approved” by the SEC. SEC,
Thinking About Investing in the Latest Hot Stock? (Jan. 30, 2021),
https://www.sec.gov/oiea/investor-alerts-and-bulletins/risks-short-term-trading-based-
socialmedia-investor-alert. Such a bulletin “has no legal force or eﬀect: it does not alter or amend
applicable law, and it creates no new or additional obligations for any persons.”50 Id.

“In evaluating conﬂict, [ ] the proper focus is on the alleged anticompetitive conduct.”
Elec. Trading Grp., 588 F.3d at 137. In Billing, the Court addressed the “manner” in which

50 17 C.F.R. §§ 240.15a-1 to 240.15c6-1 govern “Exemption of Certain OTC Derivatives Dealers
(§ 240.15a-1); “Exemption of Certain Securities From Section 15(a) (§§ 240.15a-2 - 240.15a-5)”;
“Registration of Brokers and Dealers (§§ 240.15a-6 - 240.15b11-1)” and “Rules Relating to Over-
the-Counter Markets (§§ 240.15c1-1 - 240.15c6-1)”; 17 C.F.R. §§ 240.17Ab2-1 to -2 relate to
“Registration of clearing agencies” and “Determinations affecting covered clearing agencies”
respectively; §§ 240.17Ad-1 to -24 regulate clearing agencies’ collateral call requirements; and
Regulation M and §§ 242.100 to -105 only apply to distribution of stock as part of the IPO process.
Likewise, these statutes describe permitted practices with respect to certain securities transactions,
but do not concern those at issue here.
Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 46 of 47

40
defendants eﬀectuated their alleged anticompetitive conduct through practices such as laddering
and tying. Id. (citing Billing, 551 U.S. at 278). In analyzing these practices, the Court determined
that in relation to laddering and tying, only a ﬁne line separated activity that the SEC permitted
from that the SEC disallowed. Billing, 551 U.S. at 279-80. Relying on Billing, the court in Elec.
Trading Grp., reasoned that “[i]t is a lot to expect a broker ‘to distinguish what is forbidden from
what is allowed,’” such that it would “curb” permittable conduct. 588 F.3d at 137-38. ๠e claims
at issue here do not attack or seek to prohibit short selling generally.

๠ere is no potential conﬂict either. A potential conﬂict exists when there is a possibility
that the SEC will act upon its authority to regulate the conduct. Id. at 137. To support their
argument that a “potential conﬂict” exists, Defendants refer to the SEC Staﬀ Report. MTD at 33.
But, once again, there is no evidence that the SEC investigated or plans to investigate
Defendants’ collusive behavior. And here, unlike in Billing, there is no ﬁne “line-drawing” that
needs to be done to distinguish permittable from permissible conduct as Defendants’ actions
were entirely outside the realm of the SEC’s regulatory authority. See Billing, 551 U.S. at 279.
VI.
CONCLUSION

For the foregoing reasons, Defendants' MTD should be denied.

Dated: March 11, 2022

By:

/s/ Joseph R. Saveri
Joseph R. Saveri
By:

/s/ Frank R. Schirripa
Frank R. Schirripa
Joseph R. Saveri (CA SBN 130064)
Steven N. Williams (CA SBN 175489)
Christopher K.L. Young (CA SBN 318371)
JOSEPH SAVERI LAW FIRM, LLP
601 California Street, Suite 1000
San Francisco, California 94108
Telephone: (415) 500-6800
Facsimile: (415) 395-9940
jsaveri@saverilawfirm.com
swilliams@saverilawfirm.com
cyoung@saverilawfirm.com

Frank R. Schirripa (NY SBN 4103750)
Kathryn Hettler (NY SBN 5126065)
Seth Pavsner (NY SBN 4969689)
HACH ROSE SCHIRRIPA & CHEVERIE LLP
112 Madison Ave, 10th Floor
New York, New York 10016
Tel: (212) 213-8311
fschirripa@hrsclaw.com
khettler@hrsclaw.com
spavsner@hrsclaw.com

Co-Lead Counsel for the Antitrust Tranche

Case 1:21-md-02989-CMA Document 459 Entered on FLSD Docket 03/11/2022 Page 47 of 47

File and source

File: gov.uscourts.flsd.590042.459.0.pdf
Size: 414,814 bytes
SHA-256: 5025b77f7110bc46f04a9886cc5d0b54862a12ef2db6a839ba9c20ed9b614351
Our copy: gov.uscourts.flsd.590042.459.0.pdf
Original: archive.org

Complaint - M Cinema LLC v. Silver Cinemas Acquisition Co., 342 F. Supp. 3d 126 (2022-03-11)

Full text

File and source

Related records