The Robinhood logo is displayed on a smartphone with stock market percentages in the background.
Omar Marques | Lightrocket | Getty Images
The Securities and Exchange Commission could soon pursue enforcement action against Robinhood, according to the trading firm.
Robinhood disclosed in a filing Monday that over the weekend the regulator sent it a Wells Notice, a warning that upon completion of an investigation the company could be charged.
Shares of the stock were last lower by 2% in premarket trading.
Robinhood shares over the past month
Robinhood had previously disclosed in February that it received subpoenas from the SEC related to its crypto business â specifically its cryptocurrency listings, custody and platform operations. According to Monday’s filing, the SEC has now found reason to suggest Robinhood violated securities law.
“On May 4, 2024, [Robinhood Crypto] received a ‘Wells Notice’ from the Staff of the SEC ⦠stating that the Staff has advised RHC that it made a ‘preliminary determination’ to recommend that the SEC file an enforcement action against RHC alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934, as amended,” the filing said.
“The potential action may involve a civil injunctive action, public administrative proceeding, and/or a cease-and-desist proceeding and may seek remedies that include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest, civil money penalties, and censure, revocation, and limitations on activities.”
Robinhood is due to report its quarterly earnings on Wednesday.
