‘Judge, Jury and Executioner’: How the SEC is finally leveling the playing field on its dreaded ‘Wells Notice’ enforcement process

As Securities and Exchange Commission defense counsel, we can attest first-hand to the dread of our clients’ experience when we inform them that we have received a “Wells Notice” from the Division of Enforcement at the SEC. The Wells Notice, which serves as the civil equivalent of a criminal grand jury target letter, informs the recipients that the Division is prepared to recommend to the Commissioners that they be sued. The putative defendants then learn that they have only two weeks to submit a written defense or “Wells Submission,” that may or may not be read by commissioners, and that the price of a submission is that the defendant is forced to agree that the submission itself may be used against them in any subsequent proceeding. Hardly a level playing field — until now.

On October 7