enforcement – Robinhood
Publicly-traded Robinhood Markets has received a Wells Notice after a face-to-face meeting between the Securities and Exchange Commission (SEC) Chair Gary Gensler and Robinhood CEO Vlad Tenev in January.
For a company offering crypto products and services, a Wells Notice signifies that an enforcement action by the SEC is on its way.
Robinhood explained in its required notice to investors yesterday:
“On May 4, 2024, [Robinhood Markets] 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. 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.”
See Robinhood’s 8-K filing (PDF) with the details.
more tips:
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- Crypto lawyers say SEC is ‘abusing’ the Wells process as part of ‘carpet bombing campaign’ against crypto – The Block
what you should know: With H.J.R 109 on the docket for a House Floor vote this week, the SEC led by its Democratic majority and Chair Gary Gensler may be gearing up for more actions to counter the “overreach at the SEC” narrative being driven by Republicans in the House.
enforcement – reaction
House Majority Whip Tom Emmer (R, MN) reacted on X to the Robinhood news yesterday by saying, “Regulation by intimidation” and then later adding, “These Wells notices seem to be Gary Gensler’s desperate, last-ditch attempts to intimidate and antagonize digital asset innovators.”
Commenting on X, Rep. John Rose (R, TN) said, “The [SEC] exceeded its mandate to protect investors and maintain fair, orderly markets by issuing a Wells Notice to [Robinhood], a precursor to enforcement action. I’m proud to help lead the effort to provide clarity by passing the FIT for the 21st Century Act so that rogue regulators like [Gary Gensler] can focus on their mandate to protect investors and not disrupt innovation.”
Robinhood CEO Vlad Tenev said on X last night, “Over the last three years, we’ve reached a state of regulatory onslaught that is harmful to American companies and consumers. The SEC’s continued attack on crypto, coupled with recent rule proposals like the one related to predictive data analytics, mark yet another improper attempt by the administrative state to stifle innovation…” Read Tenev’s tweet thread.
Later, Coinbase CEO Brian Armstrong commented on Tenev’s tweet, “Welcome to the club – you’re in good company 🙂 The courts will help get clarity – but the right solution longer term is we need to elect pro-crypto candidates. This is why Coinbase has supported Fairshake superpac, and StandWithCrypto[.]org. Hope y’all can join us!”
