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Robinhood Receives Wells Notice From United States Securities And Exchange Commission



Chip Somodevilla/ Getty Images

As reported by CoinDesk, trading platform Robinhood (HOOD), reportedly received a Wells Notice from the Securities and Exchange Commission (SEC) on May 4th.


SEC seal/ Facebook

According to a filing released on Monday, the notice stated that the SEC had made a "preliminary determination" to file an enforcement action against Robinhood, claiming that the company violated Sections 15(a) and 17A of the Securities Exchange Act of 1934.


In response to the notice, Robinhood took on a more combative tone in a press release, asserting that they had already made the decision not to offer certain tokens or products that the SEC had previously referred to as securities.



The company's Chief Legal, Compliance, and Corporate Affairs Officer, Dan Gallagher, expressed disappointment in the SEC's decision to move forward with the enforcement action. He also added that the company firmly believed that the assets listed on their platform were not securities.


Dan Gallagher/ Robinhood Chief Legal, Compliance and Corporate Affairs Officer

"We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law," he said in a statement.


However, a Wells Notice is a cautionary measure used by the US Securities and Exchange Commission (SEC) to alert companies that it has gathered sufficient evidence to initiate enforcement proceedings against them. Typically, such notices trigger regulatory actions against the company in question.



According to Robinhood's filing, the potential action from the SEC could include "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."


Previously, Robinhood withdrew support for Cardano (ADA), Polygon (MATIC), and Solana (SOL) on June 27. These tokens were referenced as securities in the SEC lawsuits brought against Binance and Coinbase.


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