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SEC Targets Robinhood Crypto, Recommends Lawsuit; Stock Drops 7%

May 6, 2024, 03:11 PM

Robinhood Markets Inc. has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC), indicating potential enforcement action over alleged securities violations specifically targeting its cryptocurrency business, Robinhood Crypto. The notice, issued on May 4, 2024, cites preliminary determinations suggesting violations of Sections 15(a) and 17A of the Securities Exchange Act. Following the announcement, Robinhood's stock experienced significant declines, dropping as much as 7% in pre-market trading. The SEC has also made a preliminary recommendation to file a lawsuit. The company expressed disappointment with the SEC's decision, hinting at a possible legal challenge.