Sulja Bros. Building Supplies, Ltd (SLJB)

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For those who do not know what a Wells Notice is"

Wells notice
A Wells notice is used when the U.S. Securities and Exchange Commission might bring an enforcement action against a person or a firm. The Wells Notice indicates that the SEC staff has determined it may bring a civil action against the target.

There is no legal requirement for a regulator to provide a Wells Notice, however, it is the practice of the SEC and the NASD to provide such notice.

In 1972, SEC Chairman William J. Casey appointed a committee (chaired by John Wells and commonly referred to as the “Wells Committee”) to review and evaluate the SEC’s enforcement policies and practices. Among the recommendations made by the Wells Committee was the following:

"Except where the nature of the case precludes, a prospective defendant or respondent should be notified of the substance of the staff’s charges and probable recommendations in advance of the submission of the staff memorandum to the Commission recommending the commencement of an enforcement action and be accorded an opportunity to submit a written statement to the staff to be forwarded to the Commission together with the staff memorandum."

Although the SEC did not adopt many of the recommendations of the Wells Committee it did adopt this recommendation, and the notice is now known as a “Wells Notice” and the prospective defendant’s response is a “Wells Submission.” The NASD also uses a form of the procedure in its investigations.
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If the OSC convicts and submits the investigative papers and determinations to the SEC, they are not required to send a Wells Notice as the determinations is precluded. The SEC is not required to send a Wells Notice anyway. Also the Wells Submition is a confidential response to the notice and can be used in court against the respondent. Serious consideration should be used in response to a Wells Notice.

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