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Understanding the Wells Process: The Pre‑Wells Process Versus the Post‑Wells Process

June 20, 2019, Hedge Fund Law Report

David Kornblau spoke with Hedge Fund Law Report to discuss the Wells notice process.


Discussing the process—in which the SEC sends a letter to people or firms notifying them of impending enforcement—Mr. Kornblau says, “The pre-Wells process is a way for the staff to get feedback on the investigation without triggering a six‑month deadline for filing an action. In investigations where the staff members believe they may have a case, at some point they tend to discuss their concerns with defense counsel and invite informal dialogue. That usually occurs before the Wells stage.” He adds, “There are strategic considerations in terms of how much you want to reveal about your case or your defenses to the SEC and how likely you think a Wells submission would be successful.”


On taking the correct approach to addressing a Wells notice, he states, “A key to success is not only persuasive advocacy but also understanding how the different levels of the agency will likely react to your arguments. Understanding your audience is very important.”

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