What Is a Wells Notice?

# What Is a Wells Notice?

A Wells notice is a letter, often preceded by a phone call, from the staff of the SEC's Division of Enforcement telling a person or company that the staff has made a preliminary decision to recommend that the Commission bring an enforcement action against them. It names the securities-law violations the staff plans to recommend and invites the recipient to send a "Wells submission" arguing why the Commission shouldn't sue, or shouldn't seek certain charges or remedies. It is not a charge, and the Commission hasn't voted. Under the SEC Enforcement Manual updated on Feb. 24, 2026, recipients ordinarily get four weeks to respond, and can ask for a meeting with senior enforcement staff after they do. The SEC process is civil, but the SEC can refer willful violations to the Justice Department, so the first call should be to a securities enforcement or white-collar defense lawyer.

At a glance

Where the Wells notice comes from

The term comes from a 1972 advisory committee chaired by John Wells. The SEC's rule is short: 17 C.F.R. § 202.5(c) says people involved in an investigation may submit a written statement of their position, and that "upon request, the staff, in its discretion, may advise such persons of the general nature of the investigation, including the indicated violations as they pertain to them," and how much time they have before staff presents a recommendation to the Commission.

The SEC calls the practice "informal" and discretionary. The Enforcement Manual says a Wells notice "will be provided in most cases," but staff may skip it when, for example, an emergency action is needed to freeze assets, when notice could put investor funds at risk, or when it could harm a parallel covert criminal investigation.

What a Wells notice says

Under the Enforcement Manual (Section 2.3), a Wells notice should be in writing when possible. Staff should, when feasible, call the recipient or their lawyer first (a "Wells call") and then promptly send the written notice. The notice should:

• identify the specific charges and types of relief the staff plans to recommend;
• invite a voluntary written or video statement of the recipient's position;
• set length limits (typically 40 pages, excluding exhibits, or 12 minutes of video) and, absent timing constraints, a four-week deadline;
• say the submission goes to the assigned Assistant Director;
• warn that the submission may be used by the Commission and may be discoverable by third parties; and
• attach or link the 1972 Wells Release and SEC Form 1662.

Staff should also tell the recipient about "salient, probative evidence" the staff has that the recipient may not know about, subject to confidentiality limits.

What changed in 2026

February 24, 2026 — Enforcement Manual update. The SEC's first rewrite of its Enforcement Manual since 2017 made the Wells process more uniform. The SEC said recipients "will ordinarily receive four weeks to make Wells submissions," that Wells meetings "will be scheduled within four weeks of receipt of a Wells submission," and that they "will include a member of senior leadership within the Division." The Manual now requires approval from the Office of the Director, on top of an Associate Director or Unit Chief, before staff issues a Wells notice. It also tells staff to make reasonable efforts, case by case, to let recipients review relevant, non-privileged parts of the investigative file.

May 21, 2026 — "no-deny" rule rescinded. Since 1972, the SEC's Rule 202.5(e) had required settling defendants to agree not to publicly deny the allegations. The Commission rescinded it effective May 21, 2026, and said it will not enforce existing no-deny provisions. This matters for anyone weighing settlement after a Wells notice; the SEC said the change doesn't affect its practice on admissions.

The Wells submission

A Wells submission is a voluntary brief, or video, to the Division and the Commission. The Manual says the most helpful ones:

• accurately reflect the evidence, legal issues and precedent;
• focus on disputed facts or law, and address the evidence that supports the staff's view;
• explain why the evidence doesn't meet the legal elements of a violation;
• raise litigation risk or policy concerns with the proposed charges; and
• cite the investigative record, and use an expert report where charges are complex.

Staff may reject a submission that is too long or late, and will reject one that tries to limit the SEC's use of it under Federal Rule of Evidence 408 or Form 1662, or that includes a settlement offer. Settlement offers go in a separate document. Accepted submissions go to the Commission with the staff's recommendation.

Because a submission can be used against you, and can be sought by private plaintiffs, many lawyers weigh carefully what to concede or reveal. That's a strategy decision for counsel.

After the submission

• File access: you can ask to review parts of the staff's investigative file. Staff weighs things like whether you cooperated during the investigation and whether access could affect a parallel criminal case.
• Post-Wells meeting: requests are "typically granted," usually only one per recipient, held within four weeks of the submission and attended by an Associate Director or someone more senior.
• Settlement talks: staff may negotiate, but can decline talks that would delay the Commission's review.
• The Commission decides. It may authorize a federal court action or an administrative proceeding, or the staff may close the matter. Under § 202.5(d), the staff, at its discretion, may tell a party the investigation is over, but that notice "must in no way be construed as indicating that the party has been exonerated."

Can a Wells notice lead to criminal charges?

The SEC brings civil and administrative cases only. Under 17 C.F.R. § 202.5(b), "in the case of a willful violation," it can refer a matter to the Department of Justice. Under § 202.5(f), an SEC settlement does not resolve any criminal charges. If prosecutors are involved, you may also receive a target letter or a grand jury subpoena. See What Is Securities Fraud?

FINRA Wells notices

FINRA, the broker-dealer regulator, uses a similar process. FINRA staff call the potential respondent to describe the proposed charges and primary evidence (the "Wells Call"), then confirm it in writing (the Wells notice). FINRA says an associated person who receives a written Wells notice must report it on Form U4, and firms may have disclosure obligations, for example if they are publicly traded.

What to do if you receive one

• Call securities enforcement counsel right away. Look for someone who regularly handles SEC investigations and, if criminal exposure is possible, white-collar defense.
• Calendar the deadline. The default is four weeks; extension requests must be written, state the reason and go to the Assistant Director.
• Ask for the evidence. Your lawyer can ask what the staff is relying on and request access to parts of the file.
• Preserve documents. Don't delete or alter records. Destroying records to obstruct a federal investigation is a separate crime (see obstruction of justice).
• Decide whether to submit, and what to say. Weigh the benefit of being heard against the SEC's right to use the submission.
• Keep settlement separate. Any offer goes in its own document, never in the Wells submission.
• Check disclosure duties. Public companies, registered firms and licensed individuals may have separate reporting obligations; ask counsel.

Talk to a white-collar defense attorney

Browse White Collar Criminal Defense Attorneys, Criminal Defense Attorneys or the full Find a Lawyer directory on Haute Lawyer.

Featured: Jan Lawrence Handzlik of Handzlik Law in Los Angeles represents individuals and corporations in criminal investigations and prosecutions, regulatory actions and complex civil litigation, including civil and criminal securities fraud; he is a former federal prosecutor in the U.S. Attorney's Office's Major Fraud & Special Prosecutions Section. Bruce Lehr, founding partner of Lehr Levi & Mendez, P.A. in Miami, is a criminal defense attorney whose cases include bank fraud, securities fraud, money laundering, and mail and wire fraud. Listed attorneys are paid members of the Haute Lawyer Network. Editorial selection, not a ranking.

Related questions

• What Is a Target Letter?
• What Is Securities Fraud?
• What Is White Collar Crime?
• What Is a Grand Jury?
• What Is a Federal Indictment?

Sources

• U.S. Securities and Exchange Commission, Division of Enforcement, *Enforcement Manual* (Office of Chief Counsel, Feb. 24, 2026), § 2.3 "The Wells Process" and § 2.4 — https://www.sec.gov/enforce/enforcementmanual.pdf (checked Nov. 14, 2026)
• SEC press release 2026-20, "SEC's Division of Enforcement Announces Updates to Enforcement Manual" (Feb. 24, 2026) — https://www.sec.gov/newsroom/press-releases/2026-20-secs-division-enforcement-announces-updates-enforcement-manual (checked Nov. 14, 2026)
• 17 C.F.R. § 202.5, Enforcement activities (eCFR, current; (e) shown as [Reserved]) — https://www.ecfr.gov/current/title-17/chapter-II/part-202/section-202.5 (text fetched via eCFR's renderer, https://www.ecfr.gov/api/renderer/v1/content/enhanced/current/title-17?part=202&section=202.5, Nov. 14, 2026; amendment history ends "91 FR 29896, May 21, 2026")
• SEC press release 2026-45, "SEC Rescinds Policy Regarding Denials of Settlements in Enforcement Actions" (May 18, 2026) — https://www.sec.gov/newsroom/press-releases/2026-45-sec-rescinds-policy-regarding-denials-settlements-enforcement-actions (checked Nov. 14, 2026)
• Federal Register, "Rescission of Policy Regarding Denials in Settlements of Enforcement Actions," 91 FR 29892 (May 21, 2026) — https://www.federalregister.gov/documents/2026/05/21/2026-10132/rescission-of-policy-regarding-denials-in-settlements-of-enforcement-actions (checked Nov. 14, 2026)
• SEC, Wells Release (Securities Act Release No. 5310, 1972) — https://www.sec.gov/divisions/enforce/wells-release.pdf (checked Nov. 14, 2026)
• SEC Form 1662 — https://www.sec.gov/about/forms/sec1662.pdf (checked Nov. 14, 2026)
• FINRA Regulatory Notice 09-17 (Wells process) — https://www.finra.org/rules-guidance/notices/09-17 (checked Nov. 14, 2026)

*This article is general information, not legal advice, and doesn't create an attorney-client relationship. Talk to a licensed attorney about your situation.*