Wells notice
Encyclopedia
A Wells Notice is a letter that the U.S. Securities and Exchange Commission (SEC) sends to people or firms when it is planning to bring an enforcement action against them. The Wells Notice indicates that the SEC staff has determined it may bring a civil action against a person or firm, and provides the person or firm with the opportunity to provide information as to why the enforcement action should not be brought.
Regulators are not legally required to provide a Wells Notice; however, it is the practice of the SEC and the Financial Industry Regulatory Authority
(FINRA) to provide such notice.
The name "Wells Notice" is derived from the Wells Committee which proposed this process in 1972. This SEC committee was named after John A. Wells
, its chair. The other members of the committee were former SEC Chairmen Manuel F. Cohen
and Ralph Demmler.
Among the recommendations made by the Wells Committee was the following:
"Except where the nature of the case precludes, a prospective defendant or respondent should be notified of the substance of the staff’s charges and probable recommendations in advance of the submission of the staff memorandum to the Commission recommending the commencement of an enforcement action and be accorded an opportunity to submit a written statement to the staff to be forwarded to the Commission together with the staff memorandum."
Regulators are not legally required to provide a Wells Notice; however, it is the practice of the SEC and the Financial Industry Regulatory Authority
Financial Industry Regulatory Authority
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...
(FINRA) to provide such notice.
The name "Wells Notice" is derived from the Wells Committee which proposed this process in 1972. This SEC committee was named after John A. Wells
John A. Wells
Jack Wells was a corporate lawyer at the law firm Royall, Koegel & Wells, a firm that later became Rogers & WellsIn 1972, SEC Chairman William J. Casey appointed him to a committee to review and evaluate the Commission’s enforcement policies and practices...
, its chair. The other members of the committee were former SEC Chairmen Manuel F. Cohen
Manuel F. Cohen
Manuel F. Cohen served as chairman of the U.S. Securities and Exchange Commission between 1964 and 1969 and also served as a member from 1961-1969.Born in Brooklyn, he was a graduate of Brooklyn College ....
and Ralph Demmler.
Among the recommendations made by the Wells Committee was the following:
"Except where the nature of the case precludes, a prospective defendant or respondent should be notified of the substance of the staff’s charges and probable recommendations in advance of the submission of the staff memorandum to the Commission recommending the commencement of an enforcement action and be accorded an opportunity to submit a written statement to the staff to be forwarded to the Commission together with the staff memorandum."