Supreme Court agrees to hear Robinhood appeal over 2021 IPO lawsuit

The U.S. Supreme Court agreed on Friday to hear an appeal by Robinhood Markets seeking to block a class-action lawsuit over the omission of interim financial data from the company's initial public offering in 2021.

Robinhood wants the Supreme Court to overturn a ruling by the 9th U.S. Circuit Court of Appeals that revived a lawsuit by investors against the company and firms involved with the IPO, including Goldman Sachs and J.P. Morgan Securities. A San Francisco federal court judge had previously dismissed the lawsuit.

The Trump administration and the Securities and Exchange Commission had urged the Supreme Court to hear Robinhood's appeal.

"We are pleased the Supreme Court has agreed to hear our case and look forward to presenting our argument," a Robinhood spokesperson said in a statement.

Robinhood's IPO came on the heels of a surge in investor interest during the Covid-19 pandemic in so-called meme stocks, and trading in the crypto asset dogecoin. In July 2021, Robinhood conducted its IPO, "for which it prepared a registration statement" that "contained only limited information about Robinhood's performance during the second quarter of 2021," the 9th Circuit panel that heard the case noted. "After the initial public offering, Robinhood reported financial results from that second quarter, and its stock price dropped," the panel wrote.

The investors who sued Robinhood and the other defendants alleged the registration statement omitted material information it was legally required to disclose. The lead plaintiffs in the lawsuit, first filed in 2021, are Vinod Sodha, a psychiatrist from Beverly Hills, California, and his daughter Amee Sodha, a physician from Millburn, New Jersey.

US District Judge Edward Chen in San Francisco dismissed the lawsuit in 2024 after finding that the plaintiffs' claims of Robinhood's failings were insufficient for the case to proceed. The San Francisco-based 9th US Circuit Court of Appeals revived the challenge in 2025, finding that Chen applied the wrong standards under the securities laws and regulations at issue in the case.

The Supreme Court granted Robinhood's petition (No. 25-944) on Nov. 13 but limited it to the Section 11(a) omissions question, leaving out Robinhood's separate Item 303 question. The court will decide whether an issuer can be liable under the misleading-omissions prong of Section 11(a) of the Securities Act of 1933 for failing to disclose material interim financial information, "without an additional inquiry to determine whether the omission rendered any affirmative statement misleading."

The U.S. government, invited by the court to weigh in, recommended granting review limited to a reworded version of Robinhood's first question. The government's brief, filed Oct. 7, said the second question, on Regulation S-K Item 303, did not warrant review. The investors argued that leaving out Item 303 means their Section 11(a) claim will go forward in the district court however the first question is resolved.

The case, Robinhood Markets v. Sodha, will decide how much interim financial information a company must put in an IPO prospectus before its quarterly results come out. The court has not yet scheduled argument.

Robinhood urged the Supreme Court to hear the case, saying that the 9th Circuit's decision exposes companies to massive liability while imposing burdensome disclosure requirements that risk burying investors in trivial information. The case "concerns classic half-truths in the registration statement that Robinhood used for its IPO in July 2021," the plaintiffs told the Supreme Court.

CNBC has requested comment from the attorneys representing the plaintiffs in the case.

Sources

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