Wells Notice

A Wells Notice is a communication issued by the U.S. Securities and Exchange Commission (SEC) or FINRA to individuals or entities who are under investigation for potential violations of securities laws . The notice informs the recipients of the substance of the charges that the regulator intends to bring against them, and provides them with an opportunity to submit a written statement or response, known as a Wells Submission , to the ultimate decision maker.

While there is no legal requirement for a regulator to provide a Wells Notice, it is the practice of the SEC and FINRA to do so. The SEC and FINRA do not have the authority to commence proceedings on their own; they must obtain approval from higher authorities, a process that occurs without input from the prospective defendant . The Wells Notice practice originated from recommendations made by the “Wells Committee,” chaired by John A. Wells, appointed in 1972 by SEC Chairman William J. Casey, to review and evaluate the Commission’s enforcement policies and practices .

A Wells Submission allows recipients to present factual evidence, legal arguments , and mitigating circumstances in an attempt to persuade the SEC or FINRA not to proceed with the enforcement action. This submission is considered before the final decision on whether to commence enforcement proceedings is made.

This entry was originally prepared by Mark J. Astarita, Esq. of Beam & Astarita, LLC and adapted from an article titled " Responding to a Wells Notice ."

[Last reviewed in July of 2024 by the Wex Definitions Team ]

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