Securities Litigation Advisory | Robinhood Markets Inc. v. Sodha: The Supreme Court Asked to Draw the Line on Intra-Quarter Disclosures

On February 5, 2026, the defendants-appellees in Sodha v. Golubowski, including Robinhood Markets Inc., filed a petition for a writ of certiorari with the U.S. Supreme Court. The petition seeks review of the Ninth Circuit’s decision holding that certain claims against Robinhood arising from its initial public offering (IPO) were potentially viable under the federal securities laws.

The Ninth Circuit vacated the district court’s dismissal of claims against Robinhood alleging violations of Section 11(a) of the Securities Act of 1933.¹ The plaintiffs filed suit in late 2021, asserting that Robinhood’s IPO registration statement omitted material information concerning shifts in the company’s revenue mix, as well as data showing declines in key performance indicators and cryptocurrency trading volume.² These allegations were premised on the contrast between Robinhood’s unexpectedly strong first‑quarter 2021 results—driven in part by the GameStop “meme stock” trading surge—and the more typical results reported for the second quarter of 2021.³

Robinhood’s IPO occurred on July 30, 2021, one month after the close of its second quarter.⁴ Although Robinhood was not required to release its second-quarter results until August 18, 2021, the plaintiffs nevertheless contended that the company was obligated to disclose interim financial information for the second quarter—and for the then‑ongoing third quarter—in its IPO materials.⁵

The plaintiffs did not allege that any statements in Robinhood’s offering documents regarding the company’s historical performance were inaccurate.⁶ Instead, they relied exclusively on an omissions theory—contending that, under Section 11(a), Robinhood was not permitted to remain silent about interim financial results and was required to affirmatively disclose them.⁷ Section 11(a), however, recognizes only two circumstances in which an omission is actionable: (1) under the “misleading omissions” prong, which requires disclosure when necessary to render statements in the offering documents not misleading; and (2) under the “required statements” prong, which mandates disclosure when required by another provision of the securities laws.⁸

Despite the text of Section 11(a), which would appear to compel a different outcome, the Ninth Circuit held that an issuer may be liable under Section 11(a)’s misleading omissions prong for failing to disclose interim financial data when the omitted information is material—without requiring a separate inquiry into whether the omission rendered any specific statement misleading. The court reasoned that, if alleged omissions “involve the relationship between a prior statement concerning a particular time period and an event subsequent to that time period,” the materiality inquiry effectively subsumes the question of whether a duty to disclose exists.⁹

In reaching this conclusion, the Ninth Circuit appears to have conflated the materiality requirement of the securities laws with the distinct requirement of identifying a misleading statement.¹⁰ As noted above, the text of Section 11(a) does not obligate an issuer to disclose all information an investor might find interesting—even if material. Rather, Section 11(a) requires disclosure only of information mandated by other provisions of the securities laws—such as Item 303 of Regulation S‑K, which requires disclosure of “known trends or uncertainties”—or of facts necessary to prevent affirmative statements in the offering documents from being misleading.

The Ninth Circuit's ruling also appears to conflict with the well‑established principle that accurate statements regarding a company’s historical performance are not rendered false or misleading merely because future results prove less favorable. In addition, the decision places the Ninth Circuit at odds with other circuits, which have required disclosure of interim financial results only in limited circumstances. The First Circuit, for example, has held that intra‑quarter financial data should be disclosed only when it reflects an “extreme departure” from historical performance.¹¹

The Ninth Circuit also held that the plaintiffs had stated a potentially viable claim against Robinhood for violations of Item 303 based on the failure to disclose interim results, which the court concluded also meant that the plaintiffs had stated a claim under the required statements prong of Section 11(a).¹² The court adopted a broad interpretation of Item 303’s requirement to disclose “known trends or uncertainties” that are reasonably likely to have a material impact on net sales, revenues, or income.¹³ The Ninth Circuit declined to adopt limitations on Item 303 liability recognized by other circuits, such as restricting the disclosure obligation to “persistent business conditions” (i.e., patterns lasting two months or more).¹⁴ On appeal, Robinhood argues that the second‑quarter interim results did not reflect a persistent decline, but rather a leveling off following the unprecedented spike reflected in the first quarter’s results.

The Supreme Court should grant the Robinhood appeal because the Ninth Circuit’s view on required disclosure appears broader than—and directly inconsistent with—the plain language of Section 11(a). Absent more demanding standards, strict liability claims under Section 11(a) will invariably rest on hindsight: plaintiffs will always be able to identify aspects of later financial results that they contend, after the fact, would have altered their investment decisions.

No court has ever suggested that companies are obligated to provide rolling updates on their financial performance in the run‑up to an IPO—and for good reason. Partial-quarter results are often volatile, inherently incomplete, and devoid of full‑quarter context, raising serious doubts about whether shareholders would meaningfully benefit from mandatory interim disclosures.

The Ninth Circuit’s opinion also invites forum shopping by incentivizing plaintiffs to file more cases in that circuit. Under the standards applied in other circuits, these claims likely would have been dismissed.

Lastly, the Ninth Circuit’s rejection of established limits on liability under Item 303 independently warrants Supreme Court review—not only because of the sheer volume of cases filed in that circuit each year, but also because Item 303 applies beyond IPOs to all annual and quarterly reports filed by public companies. Short‑term business volatility of the kind alleged in Robinhood is not the type of “trend” Item 303 was designed to address.

We will continue to follow the progress of this appeal and provide updates on further developments.

Endnotes

1. Robinhood Markets Inc. v. Sodha, No. 25-94. Petition for a Writ of Certiorari, filed Feb. 5, 2026 (“Cert. Petition”), at 11-12.
2. Id. at 10.
3. Id. at 6-7.
4. Id. at 7.
5. Id. at 3, 9.
6. Id. at 9-10
7. Id. at 10. 
8. 15 U.S.C. § 77k(a).
9. Cert. Petition, at 17.
10. Id. at 4, 11-12.
11. Id. at 4, 12.
12. Id. at 13.
13. 17 C.F.R. § 229.303(b)(2)(ii).
14. Cert. Petition, at 13.

If you have any questions, or would like additional information, please contact one of the attorneys on our Securities Litigation team.

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