Faruqi & Faruqi, LLP, a national securities law firm with offices in New York, Pennsylvania, California and Georgia, has opened an inquiry into Wealthfront following a sharp post-IPO decline. Since Wealthfront’s public debut in mid-December, shares have dropped by approximately 26.7%, driven by weaker net client inflows and growing scrutiny of the CEO’s ownership interest in a key banking partner for its mortgage lending initiative. The firm, which has secured hundreds of millions of dollars for investors since 1995, is evaluating potential claims related to alleged omissions or misrepresentations concerning asset-flow projections, strategic exposures in the mortgage business and possible conflicts of interest tied to the CEO’s external holdings.

Wealthfront’s SEC-mandated quiet period ends on January 21, lifting restrictions on insiders and underwriting banks from issuing research. The company sold 34,615,384 shares in its December IPO, representing a significant capital raise for its automated wealth management platform. During the quiet period, several brokerages revised their views: one research house downgraded the stock from “hold” to “sell,” while another maintained an “overweight” stance. Upon expiration, underwriters are expected to initiate formal coverage. In its first earnings release, Wealthfront reported revenue of $93.22 million and earnings per share of $0.21 for the latest quarter, underscoring both top-line growth and ongoing pressure on client acquisition trends.