SEC Issues Wells Notice to Robinhood; Alleges Potential Securities Violations
Summary:
The U.S. Securities and Exchange Commission (SEC) has issued Robinhood, the prominent trading platform, with a Wells Notice. Following this, Robinhood shares fell by 2.5% in pre-market trading. The SEC has been investigating Robinhood's cryptocurrency operations and has determined preliminarily that it might recommend an enforcement action over alleged securities violations. Meanwhile, Robinhood remains confident that its listed assets are not securities. This is a developing story.
The well-known trading platform, Robinhood, has recently been sent a Wells Notice from the U.S. Securities and Exchange Commission (SEC). As a result of this, Robinhood's (HOOD) shares took a 2.5% dip in pre-market trading to reach a value of $17.95 by 12:50 PM UTC. The issuance of the Wells Notice took place on May 4th, as revealed in several court documents.
A Wells Notice comes from the securities regulator and signals the end of its investigation into the entity being investigated—in this case, Robinhood's U.S.-based digital currency business.
The SEC, according to its filings, has been scrutinising Robinhood's digital currency listings and crypto custodial services. Furthermore, it has reached a "preliminary determination" to propose that the SEC take enforcement action regarding possible violations of securities laws.
This comes as a surprise in light of Robinhood's efforts to register itself with the U.S. securities regulator. Dan Gallagher, the principal officer in charge of legal matters, compliance, and corporate affairs at Robinhood Markets, has stated as much.
Gallagher expressed his disappointment in a blog post dated May 6, stating that the SEC's decision to issue a Wells Notice in relation to their U.S. digital currency business was unfortunate, especially considering their well-known attempts to gain regulatory clarity from the SEC and offer their full cooperation.
Gallagher further stated that Robinhood does not consider any of the assets listed on its platform as securities. He expressed their firm belief in this and mentioned that they are looking forward to having a discussion with the SEC to establish how weak a case against Robinhood's digital currency efforts would be in terms of both factual and legal aspects.
Related: Just before the deadline for the amended proposal, FTX transferred $8.3M.
This news is ongoing, and more details will be shared as they surface.
Published At
5/6/2024 3:56:11 PM
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