This page explains federal law and Securities and Exchange Commission procedure for individuals and companies in New York who receive a Wells notice: the rule that allows submissions, 17 CFR 202.5(c), and the practices described in the SEC Division of Enforcement's Enforcement Manual, dated February 24, 2026. KOR Law LLP's regulatory and enforcement practice defends clients in securities enforcement matters involving the SEC, FINRA, state securities regulators and private actions. The manual guides the staff; it is not a statute, but it explains what recipients can expect.
What is a Wells notice?
The Enforcement Manual defines it as a communication from the staff that "(1) informs the person the staff has made a preliminary determination to recommend that the Commission file an action or institute a proceeding against them; (2) identifies the securities law violations that the staff has preliminarily determined to include in the recommendation; and (3) provides notice that the person may make a submission to the Division and the Commission." The staff must obtain senior approval before issuing one, and the manual says a Wells notice "will be provided in most cases in which the staff makes a preliminary determination to recommend" an action. The manual adds that when prompt enforcement action is needed to protect investors, giving a Wells notice and waiting for a submission "may not be practical."
The legal hook is the SEC's own rule: people involved in an investigation "may, on their own initiative, submit a written statement to the Commission setting forth their interests and position," and the staff may advise them of the general nature of the investigation and the time available (17 CFR 202.5(c)). Most recipients have already dealt with the staff for some time, through document requests and testimony; the early stage is covered in what a company should do in the first week after a government subpoena.
What does the notice usually say?
Under the manual, the staff should, when feasible, call first (a "Wells call") and then send the written notice. The notice should identify the specific charges and relief being considered, invite a voluntary written or video statement, and set limits: "typically, written submissions should be limited to 40 pages, not including exhibits, and video submissions should not exceed 12 minutes," with "in the absence of timing constraints, a four-week time period." It should warn that any submission "may be used by the Commission in any action or proceeding that it brings and may be discoverable by third parties," and include the SEC's Form 1662. The staff should also tell the recipient about "salient, probative evidence" the recipient may not know about, subject to confidentiality limits.
| Stage | What the manual says |
|---|---|
| Wells call and notice | Call first when feasible, then a written notice identifying charges and relief |
| Submission length | Typically up to 40 pages (excluding exhibits) or a 12-minute video |
| Time to respond | Typically four weeks, absent timing constraints; extension requests in writing to the Assistant Director |
| Rejection | The staff may reject a submission that is too long or late |
| File access | Case by case, reasonable efforts to allow review of relevant, non-privileged portions |
| Post-Wells meeting | Typically granted, generally only one, within four weeks after the submission, with senior leadership |
| To the Commission | Accepted submissions go to the Commission with any staff recommendation |
How do you respond, step by step?
- Confirm the details. Get the proposed charges, relief and deadline in writing, and ask to see the formal order of investigation if you have not (17 CFR 203.7(a)).
- Request access to the file. Recipients may ask to review portions of the investigative file; the staff should make reasonable efforts case by case, excluding privileged and restricted material.
- Decide whether to submit. Weigh the chance of changing the recommendation against the risk that statements will be used later or discovered by private plaintiffs.
- Write to the rules. Stay within the length limit and deadline, or the staff may reject the submission. Ask for any extension in writing, explaining why.
- Focus on what helps. The manual says helpful submissions accurately reflect the evidence and law, focus on disputed issues, address the staff's evidence and adverse precedent, explain why legal elements are not met, and address litigation risks or policy issues.
- Ask for a post-Wells meeting. These are typically granted, usually once, within four weeks after the submission, with a senior official.
- Explore resolution. The staff may discuss settlement; any settlement resolves only the SEC matter, not criminal charges (17 CFR 202.5(f)).
Will the staff ask you to sign a tolling agreement?
Sometimes, and the request often comes near the Wells stage. The Enforcement Manual summarizes the deadlines the SEC faces: civil fines and penalties must generally be sought within five years from when the claim first accrued (28 U.S.C. 2462), a period the manual describes as non-jurisdictional and capable of being tolled; disgorgement generally has five years, extended to ten for violations that require proof of scienter; and claims for equitable remedies such as injunctions, bars and cease-and-desist orders have ten years. If relevant conduct may fall outside a limitations period before the SEC can act, the staff may ask the person to sign a tolling agreement, promising not to raise a limitations defense for a set time; the staff needs senior approval, initially for up to 90 days, with further approval for extensions.
Whether to sign is a judgment call that depends on the timeline and on what the extra time buys, such as a fuller Wells process. Private claims arising from the same events run on different clocks, discussed in how long you have to sue for breach of contract, fraud, or a sale of goods in New York. If the Commission authorizes an action, it may institute administrative proceedings or bring an injunctive action in court (17 CFR 202.5(b)); for how federal court differs from state court in New York, see federal court or state court for a New York business dispute.
What changes the answer?
- Parallel criminal exposure. The SEC may refer willful violations to the Department of Justice (17 CFR 202.5(b)), which makes the content of any submission especially sensitive.
- The strength of the record. A submission that confronts the staff's best evidence is more useful than one that ignores it, according to the manual.
- Timing constraints. When the staff faces limitations or investor-protection pressure, the response period may be shorter.
- Individual or company. Individuals often need counsel separate from the company.
- Other regulators. Registered persons may face FINRA requests at the same time; see what a FINRA Rule 8210 request is.
- State investigators. New York's Martin Act gives the Attorney General separate powers; see what powers the New York Attorney General has in a business investigation.
For example: a CFO who receives a Wells call
For example, imagine the chief financial officer of a Manhattan-based public company who gets a Wells call about revenue recognition, followed by a written notice proposing antifraud and reporting charges. (This is a made-up illustration, not a real client or result.) The notice allows four weeks and 40 pages.
Her separate counsel asks the staff for access to key testimony transcripts and documents, and within a week requests a short extension in writing to review them. The submission concentrates on the disputed accounting judgments, acknowledges the emails the staff relies on, and explains why the evidence does not show the required intent. Counsel then requests a post-Wells meeting, mindful that the submission could be used in any later action or sought by private plaintiffs.
Common mistakes
- Exceeding the length limit or deadline. The staff may reject the submission.
- Treating the submission as confidential. It may be used by the Commission and may be discoverable.
- Arguing around the staff's best evidence. The manual favors submissions that address it directly.
- Waiting to ask for the file. Access is discretionary and takes time.
- Ignoring criminal risk. Referral is possible (17 CFR 202.5(b)).
- Using company counsel for an individual without considering conflicts. Interests can diverge; see how to run an internal investigation without losing privilege.
What to do this week
- Write down the date of the Wells call or notice and the deadline.
- Request the proposed charges and relief in writing if not already provided.
- Ask for access to relevant portions of the investigative file.
- Assess parallel exposure: criminal, FINRA, state and private litigation.
- Decide whether to submit, and in what form.
- Plan the request for a post-Wells meeting.
Frequently asked questions
Does a Wells notice mean charges are certain?
No. It reflects the staff's preliminary determination to recommend action; the Commission decides. Accepted submissions go to the Commission with the staff's recommendation.
Can I respond by video?
Yes. The manual allows video submissions, typically limited to 12 minutes.
Can white papers be submitted before a Wells notice?
Yes, and the manual notes that the Commission may use information in such materials as an admission or otherwise as the rules of evidence permit.
What if the staff closes the investigation?
The staff may tell a party that its formal investigation has ended, but that "must in no way be construed as indicating that the party has been exonerated" (17 CFR 202.5(d)).
Can I bring a lawyer to SEC testimony?
Yes. Witnesses in formal investigative proceedings may be accompanied, represented and advised by counsel (17 CFR 203.7(b)). The FTC's comparable process is covered in what the deadlines are for an FTC civil investigative demand.