Legal Definitions - Wells Notice

A Wells Notice is a letter sent by a securities regulator to someone they are investigating. The letter tells the person what charges the regulator plans to bring against them. The person then has the chance to write a statement to the decision maker.

The SEC and NASD usually send Wells Notices, but they don't have to. The people investigating the case can't start legal proceedings without approval from someone else. The person being investigated doesn't get to give their opinion on this decision.

In 1972, the SEC Chairman appointed a committee to review the Commission's enforcement policies and practices. The committee recommended that people being investigated should have the chance to address the decision maker before legal proceedings start. This is why Wells Notices exist.

John is being investigated by the SEC for insider trading. He receives a Wells Notice that tells him the SEC plans to charge him with breaking the law. John writes a statement explaining why he thinks he didn't break the law. The decision maker reads John's statement before deciding whether to start legal proceedings.