Blockchain
Robinhood (HOOD) gains 2%, erasing early losses following SEC Wells warning
Robinhood (HOOD), the popular trading platform, received a Wells Notice from the Securities and Exchange Commission (SEC) on May 4. The stock pared earlier losses and rose about 2% on Monday.
“On May 4, 2024, RHC received a ‘Wells Notice’ from the SEC staff (the ‘Staff’) stating that the staff informed RHC that it had made a ‘preliminary determination’ to recommend that the SEC initiate a enforcement action against RHC for alleged violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934, as amended,” Robinhood said in a archiving on Monday.
In a press release, Robinhood took a more combative tone, saying that the company had already decided not to provide certain tokens or products that the SEC called securities in past stocks, calling these “tough choices.”
“We firmly believe that the assets listed on our platform are not securities, and we look forward to working with the SEC to clarify how weak any case against Robinhood Crypto would be on both the facts and the law,” he said in a statement. .
Wells notices are preliminary notices that inform companies that the SEC believes it has sufficient information to initiate enforcement action against a company and usually lead to such actions by the regulator.
The company said potential action by the agency may include “civil injunctive action, a public administrative proceeding, and/or a cease-and-desist proceeding and may seek remedies that include an injunction, a cease-and-desist order, and desistance, disgorgement, advance interest, civil monetary penalties, as well as censures, revocation and activity limitations.”
Previously, Robinhood ended support for Cardano (ADA), Polygon (MATIC), and Solana (SOL) on June 27, the three tokens named as securities in the SEC’s lawsuits against Binance AND Coinbase.
UPDATE (May 6, 2024, 2:11pm UTC): Updates headline, first paragraph, to say that shares have pared previous losses.
UPDATE (May 6, 2024, 1:15 PM UTC): Adds more details.
CORRECTION (May 6, 2024, 2:40 PM UTC): Corrects date of receipt of Wells notice to May 4.