Lawyer Monthly - December 2021 Edition

MONTHLY ROUND-UP A Miami judge has dismissed a lawsuit that accuses Robinhood and other brokerages of wrongly preventing retail investors from purchasing fast-rising “meme stocks”. According to court filings on 15 November, JPMorgan Chase filed a lawsuit against electric vehicle manufacturer Tesla in a dispute over warrants. The banking giant is seeking $162.2 million plus interest, attorneys’ fees, and expenses. JPMORGAN SUES TESLA FOR $162 MILLION IN WARRANTS DISPUTE RELATED TOMUSK’S 2018 TWEETS JPMorgan claimed that Tesla breached the terms of a con- tract that was signed between the two companies about repricing the warrants. If Te- sla’s share price rose above a contractually set “strike price” by an agreed expiration date, then it was supposed to de- liver either shares or cash. However, a dispute between Tesla and JPMorgan arose when JPMorgan adjusted the value of the warrants follow- ing a tweet from August 2018 by Tesla co-founder and chief executive Elon Musk in which he said he was considering taking Tesla private for $420 a share, and again when Musk revoked the idea a handful of weeks later. The bank claims it had a con- tractual right to make these adjustments. However, Te- sla said in a letter that they were “unreasonably swift and represented an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock.” In the subsequent 16months, Tesla stock bottomed out at a three-year low, hitting ap- proximately $177 per share in June 2019 before rocket- ing past $420 per share in December that same year. Musk was then charged with securities fraud by the SEC, with Musk and his company agreeing to pay $20 million each to settle the suit. JPMorgan alleges that “in total, Tesla failed to deliver 228,775 shares of its common stock, leaving JPMorgan with an open hedge position equal to that shortfall.” LM JUDGE DISMISSES MEME STOCK LAWSUIT AGAINST ROBINHOOD On 17 November, Chief Judge Cecilia Altonaga found no evidence of an illegal conspiracy to stop trading of GameStop Corp, AMC Entertainment Holdings Inc, Bed Bath & Beyond Inc and six other stocks. Investors claimed the brokerages and Citadel Securities LLC schemed to stop a “short squeeze” that was leading to losses in the billions for Citadel and hedge funds that were betting on stock prices falling. According to the investors, trading curbs in January left them no choice but to sell at plummeting prices. However, the judge said that investors fell “far short” of providing direct evidence of an antitrust conspiracy. This is despite emails between Citadel and Robinhood executives that lent “some credence” to the investors’ claims. Citadel said it was pleased with the judge’s decision, while Robinhood said, “this further confirms that the conspiracy theory of collusion has no basis in fact.” A lawyer for the investors, Frank Schirripa, said on Thursday that while they were disappointed with the decision, they expected to amend their complaint in the coming weeks. LM 7 DEC 2021 | WWW.LAWYER-MONTHLY.COM