Wealthfront investigated for securities fraud after 2 stock drops totaling 31%

Block & Leviton launched a securities fraud investigation into Wealthfront Corp (Nasdaq: WLTH) after the fintech firm's stock lost 31% across two earnings disclosures this year.

"The company's disclosures regarding its deposit trends and related-party transactions raise serious questions," a spokesperson for Block & Leviton said in a statement Monday.

Wealthfront's shares first plunged 16.8% on Jan. 13 after the company reported Q3 2026 net deposit outflows of $208 million, a sharp reversal from $874 million in inflows during the prior-year period. Chief Executive Officer David Fortunato attributed the slowdown to declining interest rates during the earnings call and highlighted the newly launched home-lending business as a growth driver. Fortunato disclosed he personally owns 95.1% of that business and said the company might "revisit or revise the ownership structure."

The stock fell another 14.4% on June 5 after Q1 2026 results revealed net deposits had declined 69% year over year to $554 million. Wealthfront said its gross profit margin contracted partly because of "startup expenses associated with Wealthfront Home Lending."

Insider trading records show significant stock sales before the declines. On Dec. 11, 2025, Fortunato sold $12 million worth of shares indirectly at $14 apiece, while Chief Financial Officer Alan Imberman sold $1.4 million and Chief Technology Officer Julien Wetterwald sold $1.68 million, all at the same price. Officer Kalyan Iyer sold $2.35 million. In total, insiders sold 8.3 million shares against 67.7 million purchased, with net insider sales of 59.3 million shares, according to Yahoo Finance data.

The Law Offices of Frank R. Cruz has also opened a separate investigation into Wealthfront for possible federal securities law violations.

The investigation adds legal risk to a stock already trading near its lowest levels since going public. Wealthfront's next catalyst is its Q2 2026 earnings report, expected in August, which will show whether deposit outflows have stabilized or worsened.

This article is for informational purposes only and does not constitute investment advice.