United States District Judge Paul Crotty, sitting in the Southern District of New York, has issued a ruling holding that a public company did not have a duty, upon which a federal securities fraud claim could be based, to disclose the receipt of a Wells Notice from the Securities and Exchange Commission (SEC or Commission). A Wells Notice is a notice to the recipient that the staff of the SEC’s Division of Enforcement (SEC staff) intends to recommend that the Commission pursue an enforcement action against the recipient. Under SEC Rules, in response to such a notice, the recipient is entitled to make a Wells submission presenting facts and argument as to why the SEC staff should not make such a recommendation. If the staff decides to goes forward with its recommendation, the Commission will review the recommendation and the Wells submission, and decide whether to authorize an enforce-ment proceeding. Accordingly, receipt of a Wells Notice does not necessarily indicate that charges will be filed.