Wells Notice

A Wells Notice is a letter from the Securities and Exchange Commission (SEC) to a company that is under investigation for possible securities law violations. The letter informs the company that the SEC is considering filing an enforcement action against it, and it gives the company an opportunity to respond to the allegations.

The Wells Notice is named after John Wells, who was the SEC's General Counsel from 1977 to 1981. The Wells Notice is a critical part of the SEC's enforcement process, because it gives companies an opportunity to address the allegations against them before the SEC files an enforcement action.

The Wells Notice typically includes a description of the SEC's investigation, the allegations against the company, and the potential sanctions that the SEC could impose. The letter also provides the company with an opportunity to submit a written response to the allegations.

The company's response to the Wells Notice is an important part of the SEC's decision-making process. The SEC will consider the company's response when deciding whether to file an enforcement action. If the SEC does file an enforcement action, the company's response may be used as evidence in the case.

The Wells Notice is a powerful tool that the SEC can use to investigate and prosecute securities law violations. The Wells Notice gives companies an opportunity to address the allegations against them before the SEC files an enforcement action. However, the Wells Notice can also be a stressful experience for companies, as they are forced to respond to serious allegations of wrongdoing.