Second Circuit revives ‘Flash Boys’ litigation, allows investor claims to move forward

The U. S. Court of Appeals for the Second Circuit revived litigation brought by a consolidated group of institutional investors who allege operators of the U.S. stock exchanges, including the New York Stock Exchange, Nasdaq and Bats Global Markets, along with high-frequency traders, manipulated the U.S. equities markets. U.S. District Court Judge Jesse Furman of the Southern District of New York previously dismissed the litigation in 2015, citing immunity protections for the exchanges that he believed prevented the case from moving forward.

Writing for the Second Circuit panel, Judge John Walker Jr., of the New York federal appeals court disagreed with the lower court and held that the law does not support immunity for the exchanges. The Court concluded that plaintiffs pled more than mere aiding and abetting—rather, plaintiffs alleged that Defendants were co-participants in the manipulative scheme, which they themselves benefited from. The Court remanded the case for further proceedings, allowing claims in the consolidated group of class actions to move forward. Investors in the case are represented by Motley Rice and co-counsel at Robbins Geller and Labaton Sucharow.  

Inspired by Michael Lewis’ acclaimed 2014 novel “Flash Boys,” the litigation alleges the stock exchanges gained hundreds of millions of dollars a year in fees for developing technology that exploited a microsecond-long lag in the market, giving computerized, high-speed trading firms an edge over traditional investors. 

“By reinstating this case, the Court is allowing plaintiffs’ claims that the U.S. stock exchanges are unfairly benefitting high-frequency traders and themselves to go forward.  We look forward to the next phase of this litigation,” said Motley Rice securities attorney Joshua Littlejohn.

Motley Rice securities attorneys have represented and secured settlements for investors who have suffered losses due to alleged fraud and manipulation. If you are an investor and believe you were affected by the alleged scheme, you may reach Josh Littlejohn or Meredith Weatherby by email or call 1-800-768-4026 to discuss the litigation.