Articles

The SEC's Wells Process Turns 40

In September 1972, the U.S. Securities and Exchange Commission formally adopted its “Wells process” as a result of recommendations arising out of a report authored by three distinguished private practitioners. The committee chair, John A. Wells, submitted the report to then-SEC Chairman William Casey containing a multitude of recommendations geared toward enhancing and improving the SEC’s enforcement program.

The so-called “Wells committee” was an unusual and truly remarkable example of a government agency seeking advice from the private sector. The most significant of the recommendations, numbers 16 and 17, resulted in the commission formally implementing its prelitigation process that became known as the Wells process. While novel at the time, the Wells process has served as a model for other agencies — including, most recently, the Consumer Financial Protection Bureau — to afford due process to accused parties by allowing them to respond to allegations prior to charging them.