Wells Notice

A Wells Notice is a notification issued by regulators to inform individuals and companies of completed investigations where infractions have been discovered. It usually takes the form of a letter, which notifies recipients of both of the broad nature of the violations uncovered, and of the nature of the enforcement proceedings to be initiated against the recipient. The Wells notice is named after the Wells Committee, formed in 1972 by then-SEC Chairman William J. Casey in order to review the SEC’s enforcement practices and policies, and chaired by John Wells.

The receipt of a Wells Notice means that the SEC may bring a civil action against the person or firm named therein, and gives said person or firm the chance to offer information as to why such an action shouldn’t be brought. About 80 percent of those who received a Wells Notice during the period from 2011 to 2013 later faced charges for securities law violations.

After receiving a Wells Notice, recipients have a chance for prospective defendants in any SEC enforcement proceedings to speak on their own behalves, directly to the decision makers involved in the case. A prospective defendant’s response to a Wells Notice is known as a Wells Submission. Prospective defendants have 30 days to make a Wells Submission, which should take the form of a legal brief, and include both factual and legal arguments to prove why charges should not be brought against the prospective defendants.

A Wells Submission, and its contents, are public information, as and a result, most securities law attorneys may advise that making such a submission is not always to the prospective defendants’ best interests. Anything alleged in the Wells Submission can be used against the defendant in the enforcement proceedings; it can also be subpoenaed and used against the respondents in any other civil litigation brought against the defendants.