Robinhood (NASDAQ:HOOD), a new spin on a digital brokerage, has posted an 8-K indicating they are in receipt of a Wells Notice indicating an investigation by the Securities and Exchange Commission (SEC) may lead to a lawsuit by the Commission.
According to the filing, Robinhood received the Wells Notice on May 4, 2024. The Wells Notice states that SEC Staff have recommended an enforcement action against the firm. A Wells Notice is not an indication of guilt and the SEC may not decided to pursue an action.
Robinhood has previously revealed that it had received subpoenas from the SEC, indicating that the Commission was reviewing the firm’s activities. These subpoenas targeted Robinhood’s crypto or digital asset operations.
Robinhood is scheduled to report Q1 2024 earnings this week (May 8) after the close of trading. At that time, we may anticipate the company may share some feedback on the SEC’s activities.
Robinhood is a FINRA-regulated broker-dealer with more than 23 million customers and around $119 billion in assets under custody.
Recent information provided by the company shows rising trading activity across all asset classes as both traditional and crypto markets have bounced back from previous lows. Crypto trading volumes were reported at around $6.5 billion in February, an increase of 10% versus the prior month (January).