In this fifth video in our blog series on understanding a FINRA exam, attorney Joel Beck discusses the “Wells” letter (or “Wells” call) as part of the FINRA examination or investigation process. The “Wells” notice is essentially the regulator providing the registered or associated person with official notice that they are the subject of a regulatory investigation. Importantly, receipt of the “Wells” notice triggers a registered person’s obligation to amend their Form U4.
The notices are named “Well”s after Senator John Wells who chaired a congressional committee in the early 1970s that was charged with reviewing the enforcement activities of the Securities and Exchange Commission. Senator Wells’ committee recommended that the SEC provide notice to prospective respondents of charges being considered by the SEC staff. The SEC adopted this measure as did NASD, which is now FINRA.
The “Wells” notice provides the recipient with the opportunity to make a “Wells” submission, explaining and/or arguing to FINRA staff why a formal disciplinary action should not be brought, presenting other evidence or information that had not been examined during the investigation, and/or arguing that the staff take another position, perhaps to pursue other charges than the identified ones. Whether the file a “Wells” submission depends on the facts and circumstances of each case and the goals of the investigation target. In this video, Joel provides an overview of the Wells process. Importantly, “Wells” submissions are not considered as confidential settlement discussions, and anything submitted can be used against the person by FINRA.
Please understand that these videos are designed to answer some common, basic questions but they are not a substitute for legal advice. Before responding to a “Wells” notice, consult with experienced counsel to make sure that it an appropriate course of action for you, given the facts of your situation and case. For more information, be sure to download Joel Beck’s ebook, A Stockbroker’s Guide to Regulatory Investigations, from www.brokerdefender.com. And if you’d like to speak with an experienced lawyer about your FINRA exam matter, contact The Beck Law Firm, LLC at 678-783-3692.