Electronic trading major Interactive Brokers Group, Inc. (NASDAQ:IBKR) has just filed its annual report for 2021 with the SEC, with the document containing an update on the “short squeeze” antitrust litigation.
Beginning in late January 2021, more than three dozen federal class-action lawsuits were filed in different jurisdictions against various brokers and other market participants claiming that the defendants acted improperly in restricting trading in the shares of and options on GameStop Corp. and other companies that were subject to unusual trading in January 2021 in what has been referred to as the ‘‘Reddit-related short-squeeze’’.
Most of these cases assert federal antitrust claims, including alleging an illegal antitrust conspiracy among the defendants, as well as various state and federal securities-related claims. IB LLC and its affiliates have been named as defendants in several of these class action lawsuits.
The cases were consolidated into a multidistrict litigation (MDL) and were transferred to the Southern District of Florida on April 1, 2021 for pre-trial proceedings. By the Order dated May 18, 2021, the Court divided the cases into four tranches: (1) antitrust claims (‘‘Antitrust Tranche’’); (2) state-law claims against Robinhood entities (‘‘Robinhood Tranche’’); (3) state-law claims against other defendants (‘‘Other Broker Tranche’’); and (4) federal securities law claims (‘‘Federal Securities Tranche’’).
On July 13, 2021, the plaintiffs voluntarily dismissed the Robinhood Tranche case. Master complaints for the Antitrust and Other Broker Tranche cases were filed on July 26, 2021. Interactive Brokers LLC (IB LLC) was named as a defendant in the antitrust complaint and in two of the initial Federal Securities Tranche complaints, but not in the Other Broker Tranche complaint. On August 30, 2021, IB LLC and the other defendants named in the antitrust consolidated complaint filed a motion to dismiss the case.
By order dated November 17, 2021, the Court granted the defendants’ motion to dismiss but allowed plaintiffs to file a final amended complaint. On January 20, 2022, plaintiffs filed an amended consolidated complaint that did not name IB LLC as a defendant. Lead plaintiffs’ counsel in the Federal Securities Tranche filed a consolidated complaint on November 30, 2021. That complaint also did not include IB LLC as a defendant.
As a result, IB LLC is no longer a party to any of these ‘‘short squeeze’’ class action lawsuits.
Let’s recall that, on January 28, 2021, Interactive Brokers placed certain stock option trading into liquidation only. The reason – the market volatility. The company put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets. In addition, long stock positions required 100% margin and short stock positions required 300% margin. A couple of days later, the broker abandoned the restrictions.