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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 21-2989-MDL-ALTONAGA/Damian
This Document Relates to the Federal Securities Tranche
PLAINTIFFS’ DISCOVERY MEMORANDUM REGARDING REQUESTS FOR
PRODUCTION OF DOCUMENTS DIRECTED TO ROBINHOOD MARKETS, INC.,
ROBINHOOD FINANCIAL LLC, AND ROBINHOOD SECURITIES, LLC
(“ROBINHOOD”)
In re: JANUARY 2021 SHORT SQUEEZE
TRADING LITIGATION
Case 1:21-md-02989-CMA Document 587 Entered on FLSD Docket 08/07/2023 Page 1 of 8
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After extensive negotiations with respect to Plaintiffs’ Requests for Production (“RFPs”)
1–88, Plaintiffs now move to compel production of Robinhood’s communications with Congress
and regulators arising from the stock restrictions at issue, and data reflecting Robinhood’s
manipulative transactions in customer accounts.1
A.
Official Requests By and Communications With Various Investigators
On June 3, 2021, the Court ordered all defendants to produce: “Records already produced
by Defendants to Congress and other government entities”. Order, Jun. 3, 2021 (ECF 323) at 2,
¶6.2 Robinhood refuses to produce communications pertaining to the multiple regulatory
investigations, including: requests for data, information, and documents; responses to Congress’s
and investigators’ questions; and exchanges regarding the scope of documents/information to be
produced. See Ex. A (RFPs 4-6 and responses). This refusal contrasts not just with the Court’s
order, but also with the productions made by other MDL defendants who turned over the
investigators’ requests, responsive correspondence, and documents (some with Bates stamps
identifying the investigator).3 See Id. Despite its blanket objections, Robinhood has produced one
regulator’s request (Ex. B hereto), but not its response(s) thereto. Robinhood’s answers to the
questions posed, including the reasons for Robinhood’s imposing the restrictions, are surely
1 Document production is complete with respect to only 18 RFPs. This motion pertains only to
specific areas of disagreement, not the sufficiency of Robinhood’s actual production.
2 Defendants were required to produce these same documents to Plaintiffs in the Federal
Securities Tranche upon denial of the pending motion to dismiss, which occurred on 8/22/2022.
Order, Nov. 23, 2021 (ECF 443) at 10, ¶7.1.
3 Robinhood not only refused to produce prior productions intact, but also insisted upon removing
Bates-stamps identifying the investigator (later agreeing only to provide a data overlay only for
130 pages specifically referenced in the House Financial Services Committee Report). Thus, even
though Robinhood uniquely tagged its earlier productions, in the event the Court grants this motion
without ordering complete data overlays, Robinhood will succeed in hindering Plaintiffs’ ability
to match a particular investigator’s requests to responsive information provided to that investigator,
an especially daunting task with respect to untitled spreadsheets produced with scant metadata.
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relevant to the action and should be produced.
In support of its “clone discovery” objections, Robinhood cited cases with vastly different
facts, e.g., where a blanket request for all discovery from an earlier related action was not tailored
to the case at hand,4 or where information from a prior governmental investigation was a matter of
public record, accessible to plaintiffs.5 In contrast, in cases where investigative requests pertain to
the claims asserted, such documents are often volunteered. See, e.g., In re Apple iPhone/iPad
Application Consumer Privacy Litig., 2012 WL 5897351, at *6 (N.D. Cal. Nov. 21, 2012) (“Apple
notes that it will provide responsive documents prepared at a government’s request … and
government subpoenas”). Production is also ordered to aid in discovery efforts. See Ft. Worth
Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 297 F.R.D. 99, 111 (S.D.N.Y. 2013) (“[R]esponses
to government investigations should therefore be produced. [T]o help guide this disclosure, J.P.
Morgan shall provide the plaintiffs with copies of any government subpoenas ...”). As in J.P.
Morgan, the Zantac court noted that production of investigative requests can help contextualize a
party’s responses. 2020 WL 5585137, at *3.6
Correspondence with the government is “relevant if it discusses the conduct that was under
investigation.” Id. Even where a privilege exists to protect some disclosures – none is present here
– factual information in communications with Congress and various regulators is discoverable. See
4 Stellato v. Medtronic Minimed, Inc., 2021 WL 3134685, at *3 (M.D. Fla. Feb. 2, 2021); Pictsweet
Co. v. R.D. Offutt Co., 2020 WL 12968432, at *5 (M.D. Tenn. Apr. 23, 2020).
5 In re Zantac (Ranitidine) Prod. Liab. Litig., 2020 WL 5585137, at *3-4 (S.D. Fla. Sept. 16, 2020).
6 Here, documents produced to unspecified investigators include hundreds of spreadsheets without
enough information to discern what they represent and/or to explain discrepancies among them.
For example, Robinhood appears to have produced spreadsheets to two SEC offices in response to
requests for equity orders cancelled in January 2021 – but the total number of cancelled GameStop
orders in RHMDL00018578 and in RHMDL00013428 do not match. Access to the initial requests
and correspondence is essential to determine the basis for such differences (if any) and to enable
Plaintiffs’ experts to make apt comparisons to the same Class Period data sought by Plaintiffs.
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In re Wilmington Trust Secs. Litig., 2016 WL 9753979, at *5-6 (D. Del. Aug. 16, 2016) (bank
examiner privilege does not shield factual information provided to regulators from production in
securities fraud case). Plaintiffs need to review both the requests and Robinhood’s responses to
ensure the completeness and accuracy of information produced to Plaintiffs. Data overlays of the
original Bates stamps are also necessary to link each investigator’s requests to the documents and
data produced in response thereto.
C.
Data Reflecting Robinhood’s False Supply and Demand Signaling to the Market
On January 28, 2021, the National Securities Clearing Corporation (“NSCC”) requested an
additional $3.2 billion of collateral from grossly undercapitalized Robinhood. Robinhood could
not fund its NSCC deposit that day. To reduce its collateral requirements and avert a liquidity crisis
and potential bankruptcy, Robinhood killed the “meme” stock rally by imposing PCO (“position
closing only”) restrictions, i.e., customers could sell but not buy the stocks at issue, which caused
an immediate and drastic decline of the stock prices and reduced its NSCC collateral requirements.
In addition to §10(b) liability for the PCOs, §9(a)(2) liability arises from Robinhood’s forced or
“involuntary” transactions in customer accounts by which Robinhood manipulated demand for and
supply of the Affected Stocks – also inducing sales and lowering stock prices. See MTD Order
(ECF 503) at 19-23. These transactions include cancelled purchases, margin sales, and early close-
outs of options prior to expiration. Plaintiffs requested information and data concerning the
manipulative transactions, but Robinhood refuses to produce it. Ex. A (RFPs 19, 20 and 23 and
responses).
Cancelled Purchases: Robinhood cancelled an extraordinary number of purchase orders
for the stocks it decided to PCO and later restrict, primarily orders placed between the close of the
market on January 27 and the opening of trading on the 28th. Removal of this significant amount
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of demand from the market manipulated prices by inducing a downward spiral of panicked selling.
Only Robinhood can provide this data, critical to proof of loss causation and damages, because
internal order cancellation information is not reported outside of Robinhood.
Plaintiffs sought documents and data “evidencing the cancellation and/or rejection of
purchase orders … including the date and time customers received such notifications” (RFP 19),
to measure, inter alia, demand reduction, price impact, and damages caused by Robinhood’s Class
Period actions. Robinhood objected that the request was overbroad – to the extent it sought
cancellations/rejections not initiated by Robinhood or not related to the claims alleged – and
unduly burdensome. At the initial meet-and-confer, the parties agreed to limit the scope of the
production to involuntary cancellations of valid orders7 and, because of the purported burden,
Plaintiffs initially agreed to accept daily, aggregated cancellation data, not trade-by-trade
information. Thereafter, Robinhood produced to Plaintiffs two spreadsheets with trade-by-trade
cancelation data, with 16 fields of information, provided to FINRA (RHMDL00047925-26), which
demonstrated it is not burdensome to produce. In March, after Plaintiffs renewed the request for
trade-by-trade information because its production is not an undue burden, counsel stated that the
FINRA data was a “sample” of what Robinhood would produce.
Alas, more than three months later, Robinhood did not produce the granular, trade-by-trade
data provided to FINRA, but only the limited daily data initially offered, to wit: date, symbol,
number of cancellations, and number of shares/contracts. Alarmingly, the data in the few fields
Robinhood did produce is wildly different from the Class Period cancellation data provided to
7 Orders not cancelled by Robinhood or legitimately rejected/cancelled (e.g., due to insufficient
funds) are outside of the claims alleged and not subject to production. To compare Class Period
cancellations with Robinhood-initiated cancellations of valid orders in periods before and after,
the time period requested is Dec. 1, 2020, through Mar. 5, 2021, for all restricted stocks.
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FINRA. Although the differences may stem from Robinhood’s stated decision – contrary to the
agreed-upon scope limitation – to provide all rejections and cancellations, its offer to remove
irrelevant trades from the daily data is insufficient. Trade-by-trade data is needed to show the exact
dates/times on which orders were placed and cancelled because most of the buy orders at issue
straddle parts of two days (the 27th and 28th), rendering daily data imprecise.
Involuntary Sales Due to Margin Calls: RFP 22 sought data pertaining to all involuntary
sales of customers’ shares; RFP 20 requested a subset of that data: sales of long positions in the
restricted stocks due to margin calls. Because Robinhood objected that the requests were
burdensome, the parties’ negotiations focused on margin-sales data showing that Robinhood sent
false signals to the market by artificially increasing supply. After nine months, Robinhood
produced one spreadsheet vaguely titled “Equity Close Outs.” When questioned, Robinhood stated
it combined data responding to RFPs 20 and 22 to provide an “exhaustive response.” Although
Robinhood indicated that it would try to “provide the narrower data set if that would be helpful to
Plaintiffs …. close-outs due to margin calls are not directly identifiable in Robinhood’s systems.”
If true, Plaintiffs should have been informed of such a limitation from the outset. Further,
this appears to be at odds with documents produced in response to earlier investigative requests
for daily margin call data for January 2021, including date, symbol, and the number of margin calls
issued, met, and those resulting in liquidation. RHMDL00004341-42. Moreover, Plaintiffs cannot
reconcile the Robinhood’s “Equity Close Out” figures with that data. While the difference could
arise from Robinhood’s unilateral combination of RFP 20 and 22 data, its removal may not suffice
if, as Robinhood now claims, the narrower results might still be “overinclusive”. As with
cancellations, the production of granular trade-by-trade data rather than aggregated daily totals is
necessary to ensure the completeness and accuracy of the data.
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Dated: August 7, 2023
Respectfully submitted,
THE ROSEN LAW FIRM, P.A.
Laurence M. Rosen, FBN# 0182877
Phillip Kim
Robin Bronzaft Howald
Jonathan Stern
Brent LaPointe
Michael Cohen
By: /s/ Laurence M. Rosen
Laurence M. Rosen, Esq.
275 Madison Avenue 40th Floor
New York, New York 10016
Tel: (212) 686-1060
Fax: (212) 202-3827
Email: lrosen@rosenlegal.com
Counsel for Lead Plaintiff Blue Laine-Beveridge and
Named Plaintiffs Abraham Huacuja, Ava Bernard,
Brendan Clarke, Brian Harbison, Cecilia Rivas, Doi
Nguyen, Joseph Gurney, Marcel Poirier, Sandy Ng,
Santiago Gil Bohórquez, and Thomas Cash
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CERTIFICATE OF GOOD FAITH CONFERENCE
Pursuant to Local Rule 7.1(a)(3), undersigned Plaintiffs’ counsel conferred with all
parties who may be affected by the relief sought in the motion in a good faith effort to resolve
the issues raised in the motion and have been unable to do so.
/s/ Laurence M. Rosen
CERTIFICATE OF SERVICE
I hereby certify that on August 7, 2023, a true and correct copy of the foregoing
document was served by CM/ECF to the parties registered to the Court’s CM/ECF system.
/s/ Laurence M. Rosen
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