Robinhood receives stark warning from SEC

The Securities and Exchange Commission is gearing up to sue Robinhood's crypto unit.

Transcript

00:00 I'm Conway Gittins, reporter from the New York Stock Exchange.

00:02 Here's what we're watching on the street today.

00:04 Wall Street built on momentum Monday,

00:06 following the stock market's first back-to-back weekly

00:09 gains since March.

00:10 Investors are hoping a cool down in hiring

00:12 could prompt the Federal Reserve to cut interest rates

00:15 as early as September.

00:17 The Dow rallied for a fourth straight session.

00:19 Meanwhile, the S&P 500 gained 1%.

00:22 The Nasdaq was up a full percent as well.

00:25 Investors are gearing up now for earnings out of Walt Disney

00:28 on Tuesday. Of key interest for Wall Street?

00:31 New subscriber numbers for Disney streaming service,

00:34 Disney+.

00:35 In other business headlines, Robinhood's crypto division

00:38 is in trouble with the Securities and Exchange

00:40 Commission.

00:41 The company says it has received a warning from the SEC

00:44 of an enforcement action known on Wall Street

00:47 as a, quote, "Wells Notice."

00:49 The focus of the notice?

00:50 Crypto tokens traded on Robinhood.

00:53 The SEC has taken a hard line against crypto companies,

00:56 claiming most digital tokens should

00:58 be regulated as securities and thus subjected

01:02 to SEC registration rules.

01:04 The crypto industry, however, begs to differ and accuses

01:07 the SEC of being too aggressive.

01:10 Robinhood's chief legal compliance and corporate affairs

01:13 officer, Dan Gallagher, said in a statement, quote,

01:16 "We firmly believe that the assets listed on our platform

01:20 are not securities, and we look forward

01:22 to engaging with the SEC to make clear just how weak any case

01:27 against Robinhood Crypto would be."

01:29 Even though the SEC sent Robinhood the warning,

01:32 that doesn't automatically mean the company knowingly

01:35 did anything wrong.

01:36 That'll do it for your daily briefing from the New York

01:38 Stock Exchange.

01:39 I'm Conway Gittens with The Street.

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