Robinhood, the popular trading platform, is on the verge of finalizing a settlement with investors who sued the company over its actions during the 2021 meme stock frenzy, particularly the trading halt on certain stocks like GameStop. The platform's legal team recently filed a document with a Miami federal court, indicating that they are in the process of finalizing the settlement with the investor group. It's expected that the settlement terms will be disclosed and the case will be dismissed within the next two weeks.

The lawsuit, led by Plaintiff Blue Laine-Beveridge and other investors, accused Robinhood of unlawfully manipulating market prices and causing significant losses for investors by restricting the trading of certain stocks between January 28 and February 4, 2021. Among the affected stocks were GameStop, AMC, Bed Bath & Beyond, BlackBerry, Nokia, trivago, Koss, Express Inc., and Tootsie Roll. The investors claimed that Robinhood's actions violated securities laws and wiped out billions of dollars in equity.

This settlement comes after United States District Judge Cecilia Altonaga denied the investors' request to file a new motion for class certification in April. The lawsuit against Robinhood is part of a broader legal battle across multiple U.S. jurisdictions related to the platform's handling of meme stocks.

The term "meme stocks" refers to stocks like GameStop and AMC that experience volatile price movements driven by social media hype and retail investor enthusiasm. These stocks gained significant attention in January 2021 during a "short squeeze" that caused massive losses for hedge funds and short sellers. Keith Gill, also known as "Roaring Kitty," was credited by many for fueling the GameStop rally through his online posts.

Recently, Gill made a return to social media platform X, posting cryptic memes that excited traders and briefly boosted GameStop's stock price. However, GameStop's stock has since declined, closing at $21.24 on May 29, down from its recent peak of $48.75 in mid-May.

The impending settlement between Robinhood and the investors underscores the legal and regulatory challenges faced by trading platforms amid the volatility of meme stocks and the increasing scrutiny from both investors and regulators.