The Securities and Exchange Commission (SEC) sent a Wells Notice to the well-known trading platform Robinhood (HOOD) on May 4. On Monday, the stock recovered almost 2% after cutting its losses earlier.
“On May 4, 2024, RHC received a ‘Wells Notice’ from the Staff of the SEC (the ‘Staff’) 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,” Robinhood stated in a Monday filing.
In a news release, Robinhood adopted a more confrontational stance, stating that it had previously made the “difficult choices” to stop offering specific tokens or items that the SEC had previously classified as securities.
Former SEC commissioner Dan Gallagher, Chief Legal, Compliance, and Corporate Affairs Officer at Robinhood, expressed his disappointment at not being able to cooperate with the agency.
The business stated that the potential action taken by the agency might 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.”
Earlier on June 27, Robinhood discontinued service for Cardano (ADA), Polygon (MATIC), and Solana (SOL), the three tokens that were listed as securities in the SEC cases against Coinbase and Binance.