Robinhood stock eased Monday after the digital brokerage announced it received a Wells Notice from the Securities and Exchange Commission.
Robinhood Markets, in Monday's filing, disclosed that it received a Wells Notice from the SEC on Saturday. The notice recommended enforcement action against Robinhood's crypto business, Robinhood Crypto (RHC). RHC previously received subpoenas from the SEC regarding its cryptocurrency listings, custody services and platform operations, Robinhood said, noting it cooperated with the investigations.
The SEC may seek an injunction, a public administrative proceeding or a cease-and-desist order as potential enforcement actions, according to the notice. The SEC may also require Robinhood to pay disgorgement, prejudgement interest and civil money penalties. The regulator could limit or revoke Robinhood's crypto activities as well, the notice said.
Meanwhile, Robinhood is scheduled to announce first-quarter results late Wednesday. FactSet expects earnings improve to 6 cents per share, swinging from a loss of 57 cents per share last year. Analysts predict revenue jumps 24.5% to $549 million.
Robinhood Stock
Robinhood stock tumbled as much as 7% premarket Monday on the announcement. HOOD stock climbed nearly 2% after the opening bell but closed with a 1% decline.
Shares are holding above support the 50-day line.
HOOD stock rallied more than 39% in 2024, benefiting from a rising bitcoin price early in the year.
Bitcoin, which had pulled back from March peaks, pared its morning gains to slide about 0.9% over the last 24 hours as of Monday afternoon.
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