Shares of Robinhood Markets Inc. (NASDAQ:HOOD) slipped 2.7% in premarket trading Monday after the trading platform operator said it received a "Wells Notice" from the U.S. Securities and Exchange Commission (SEC).
This notice indicates that the SEC has made a "preliminary determination" to suggest filing an enforcement action against Robinhood's crypto unit for alleged securities violations
The move follows an earlier SEC investigation into Robinhood's cryptocurrency listings, custody of cryptocurrencies, and platform operations.
“The potential action may 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,” the company said in a statement