The Securities and Exchange Commission (SEC) monitors investment markets and securities-related matters to help protect the legal rights of investors. Business owners, financial professionals and others who work in the securities sector could eventually come under scrutiny due to their professional conduct or personal investment practices.
SEC investigations can be a lengthy process, and often people are unaware of the pending issues that might arise until they receive a formal letter from the SEC. Receiving a Wells Notice in the mail is enough to make most people immediately panic. Having the right support in the days immediately following the arrival of a Wells Notice can make a profound difference for those under scrutiny.
What is a Wells Notice?
The Wells Notice is essentially a warning about impending legal action on the part of the SEC. When the organization has conducted a preliminary investigation and believes that criminal misconduct or securities fraud occurred, they send the Wells Notice to advise the person under scrutiny of the upcoming legal action. The Wells Notice provides an opportunity for business owners, investors and financial professionals to respond to the allegations against them.
What should happen after a Wells Notice arrives?
Those who receive a Wells Notice generally only have 30 days or four weeks after the arrival of the notice to respond. They can do so by submitting a formal Wells Submission to the SEC. The submission typically contains information relevant to the claims made by the SEC or additional documentation that could help reframe the issues identified in the Wells Notice.
Given the complexity of the legal issues involved, many people preparing a Wells Submission specifically choose to hire an attorney to assist them with putting together a Wells Submission. In some cases, a white-collar criminal defense attorney who reviews the Wells Notice and other key information may determine that responding with a Wells Submission may not be in the best interests of their client.
Instead of panicking and potentially worsening the situation or ignoring a Wells Notice, those under scrutiny by the SEC may benefit from a proactive response, typically after securing insight and guidance from a white-collar criminal defense attorney. Responding promptly and preparing for a potential legal controversy ahead can help people protect their freedom and their professional reputations after the arrival of a Wells Notice.