Wells Notice

A "Wells Notice" is a letter sent by a securities regulator to a prospective respondent, notifying him of the substance of charges that the regulator intends to bring against the respondent, and affording the respondent with the opportunity to submit a written statement to the ultimate decision maker.

There is no legal requirement for a regulator to provide a Wells Notice, however it is the practice of the SEC and the NASD to provide such notice.  Procedurally, the SEC and NASD Staff (the people you are dealing with during the investigation) do not have the authority to commence proceedings.  They need to obtain approval to commence proceedings.  The approval process is handled without any input from the prospective defendant.

While there is no rule or regulation that requires that a prospective defendant be given the opportunity to address the decision maker prior to the filing of an action, in 1972, SEC Chairman William J. Casey appointed a committee (chaired by John Wells and commonly referred to as the “Wells Committee”) to review and evaluate the Commission's enforcement policies and practices.  The Wells Notice stemmed from that committee's recommendations.

This Wex entry prepared by Mark J. Astarita, Esq. of Beam & Astarita, LLC and adapted from an article titled "The Wells Notice in SEC and NASD Investigations." 

 

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