Robinhood Stock Drops 7% on SEC Crypto Lawsuit Notice Before Earnings

May 6, 2024, 12:56 PM

Robinhood Markets Inc. has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC), indicating the regulator's intent to recommend enforcement action against the company's cryptocurrency business, specifically Robinhood Crypto (RHC). The SEC's preliminary determination cites alleged violations of Sections 15(a) and 17A of the Securities Exchange Act. This notice, issued on May 4, has led to a significant drop in Robinhood's stock, which fell by as much as 7% in pre-market trading right before its earnings release. SEC staff have also recommended filing a lawsuit against the company.