The SEC's "Wells process" kicks in when the Enforcement staff makes a preliminary determination to recommend that the Commission bring an action against a particular person or entity. Under the Wells process (which takes its name from recommendations made by an advisory committee chaired by John Wells), the potential defendant is informed of this determination, as well as the securities law violations that the staff believes have occurred, via a Wells notice. The person or entity receiving the notice is also offered the chance to make a submission to the Enforcement Division and the Commission to lay out their position and, perhaps, persuade the Commission not to bring an action.

Historically, there has not been any public data on the success potential defendants who file Wells submissions have had in getting the Commission to actually refrain from filing an enforcement action. Today, however, The Wall Street Journal reports that in response to a FOIA request, the Journal obtained information from the SEC showing that over the two-year period ending in September 2012, approximately 20% of individuals who received a Wells notice from the SEC ended up not facing charges. Specifically, the Journal reports that over that period, 159 of the 797 Wells notices issued "went nowhere or stalled," with the SEC taking no action. The SEC also sent Wells notices to 387 entities during that period, but the SEC's response to the FOIA request did not indicate how many of those matters were closed with no enforcement action.

The SEC told the Journal that the fact that it did not proceed against 20% of the individuals receiving Wells notices shows that the agency is carefully considering the evidence and arguments presented to it through the Wells process. Former SEC Chairman Mary Schapiro agreed, saying that the number show "the system is working."

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