Judge Altonaga Appoints Rachel Furst as Liaison Counsel for January 2021 Short Squeeze Trading Litigation

BOCA RATON, Fla., June 9, 2021 /PRNewswire/ -- Attorney Rachel Furst of Grossman Roth Yaffa Cohen has been appointed by Judge Cecilia Altonaga of the United States District Court for the Southern District of Florida to serve as liaison counsel of the January 2021 Short Squeeze Trading multidistrict litigation (MDL). 

The MDL has consolidated more than 50 lawsuits brought forth against 35 defendants—Robinhood, TD, Ameritrade, Sequoia Capital, and E*TRADE, among others—and sorted them into four tranches, or groups:

• Antitrust claims
• Federal securities law claims
• State-law claims against Robinhood
• State-law claims against broker-dealers

In January 2021, GameStop (GME) stock made the news for skyrocketing to about 30 times its valuation at the start of the month. It is important to note that 11 other stocks are at issue in the MDL, however:

• AMC Theatres (AMC);
• American Airlines (AAL);
• Bed Bath & Beyond (BBBY);
• BlackBerry (BB);
• Express (EXPR);
• Koss (KOSS);
• Naked Brand Group (NAKD);
• Nokia (NOK);
• Sundial Growers Inc. (SNDL);
• Tootsie Roll Industries (TR); and
• Trivago N.V. (TRVG).

Each of the plaintiffs had identified that certain securities were undervalued, as well as that the "short" positions of various hedge funds and investment firms were over-leveraged. ("Short selling" involves borrowing shares of a stock to quickly sell them and buy them back later at a lower price. The "short seller" profits off the difference.) In the final weeks of January, the retail investors purchased these undervalued stocks that were being "shorted" by hedge funds. This led to a "short squeeze," as those shorting the stock were pressured to close their short positions.

At the height of the short squeeze on January 28, brokerages put a hold on certain securities. Retail investors could no longer buy these stocks, only sell them. As such, they alleged market manipulation and started filing suit against various brokerages.

In April 2021, the Judicial Panel on Multidistrict Litigation consolidated 39 suits before Judge Altonaga, as they each involved similar breach-of-contract claims stemming from trade restrictions that online platforms imposed on the aforementioned stocks.

It is a great honor to be appointed to the leadership team that aims to hold 35 broker-dealers accountable for their actions, particularly as the control they exercised over the market January 28 attracted the attention of Americans across the political spectrum.

"This case has generated enormous attention because so many investors were harmed by Robinhood and the other defendants' unfair and unlawful practices," Attorney Furst said in a statement. "I am pleased that these important cases are here in Miami, and I am honored to have been appointed to help to coordinate the talented group of attorneys. Judge Altonaga appointed lawyers from around the country who I know will work hard and quickly to develop and bring these cases to trial."

Attorney Rachel Furst has dedicated her career to representing plaintiffs in individual and class action lawsuits involving deceptive consumer practices, breach of fiduciary duty, professional malpractice, and personal injury. She is acclaimed by 40 Under 40 Outstanding Lawyers of South Florida, Super Lawyers®, and Rising Stars for her exemplary legal representation. To learn more about Attorney Furst's work as a partner at Grossman Roth Yaffa Cohen, kindly visit grossmanroth.com today.

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SOURCE Grossman Roth Yaffa Cohen