When online trading platforms such as Robinhood and TD Ameritrade restricted or outright barred trading in meme stocks at the height of l’affaire GameStop in January, users were pissed, and plaintiffs’ lawyers were delighted. Alas, their dreams of making those companies pay for allegedly being in cahoots with Citadel or the hedge funds or whatever just took a bit of a hit.

The U.S. Court of Appeals for the Eighth Circuit on Friday rejected a proposed class-action lawsuit from investors who accused the brokerage of securities fraud…. In Friday’s opinion, the judges didn’t weigh in on the substance of the plaintiffs’ fraud allegations. Instead, they found it would be too difficult to determine which investors had been harmed by TD Ameritrade’s order-routing practices.

“Too difficult” because the plaintiff’s proffered approach to determining who got screwed and how badly by TD Ameritrade’s practice—along with just about everyone else—of accepting payment for order flow from high-speed traders, Citadel and the like—using giant, powerful computers—was rejected by the court. Given the sheer number of trades at issue, there is no other feasible option, and thus, no class action. Individual traders who feel sufficiently aggrieved can undertake their own investigation and gather evidence of their own particular alleged screwing and sue, well, individually, if they like.

Since the courts aren’t willing to scare the brokerages into ending payment for order flow, it will fall to Gary Gensler & co. to decide whether to step in and stop the scourge that is free trading for the masses.

TD Ameritrade Wins Legal Battle Over Handling of Investors’ Orders [WSJ]

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