The U.S. Supreme Court will decide whether Section 11 liability can attach to Robinhood over its 2021 IPO disclosures without separately asking whether an omission made an affirmative statement misleading.
An order issued Friday, Nov. 13, granted Robinhood’s petition for a writ of certiorari and confined the appeal to that issue. The justices left outside their review a separate question about whether Item 303 requires companies to disclose interim financial data before quarterly reports are due.
Investors allege that Robinhood’s July 2021 IPO registration statement omitted material details about the company’s second-quarter performance. Robinhood reported second-quarter results on Aug. 18, 2021; a U.S. government brief said its revenue was within the range estimated in the registration statement. Shares later fell about 10% after the company reported third-quarter results on Oct. 26, according to the appeals court’s account.
Robinhood is asking the Supreme Court to overturn the Ninth Circuit decision that revived part of the lawsuit. The appeals panel returned the investors’ Section 11 and Item 303 theories for further consideration, while leaving in place the dismissal of a separate Item 105 claim.
The Ninth Circuit also described Robinhood’s performance as weakening after trading in meme stocks and Dogecoin subsided. The United States filed a brief Oct. 7 urging review of the first question after the Supreme Court requested the solicitor general’s views; the government also proposed a revised formulation of that question. The docket lists no date for oral argument.
