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Wells notice

The Securities and Exchange Commission may send a so-called Wells notice to a company or individual that is the subject of an investigation that is likely to proceed to enforcement action. The notice gives the company or individual an opportunity to respond.

Expanded Definition

A Wells notice will outline the general nature of the investigation and list the alleged violations under scrutiny. The notice gives the subject of the investigation the opportunity to file a response before the SEC proceeds with enforcment.

Wells notices may follow preliminary or formal investigations, and a company that receives one will not necessarily go on to be punished. But investors should take note, because a Wells notice is never a good thing.

The Wells notice gets its name because the process evolved from recommendations made by an advisory committee chaired by John Wells.

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