by Stephen M. Cutler, Michael J. Osnato, Jr., and Kelsey E. Vickery

On November 4, 2019, the Securities and Exchange Commission brought an enforcement action that has possible implications for the Wells process. The complaint filed by the Commission in SEC v. Bolton Securities Corp.^[1] raises the question whether parties must consider reining in their advocacy in Wells submissions—lest such advocacy be taken as proof that potential respondents are unwilling to acknowledge wrongdoing or, in common enforcement parlance, that they “don’t get it.” We hope that the Commission’s approach in this action is an aberration rather than a new normal—one that, in our view, would undermine one of the hallmarks of due process in the Commission’s enforcement program.

The underlying case involves Massachusetts-based registered investment adviser, Bolton Securities Corp., doing business as Bolton Global Asset Management (“Bolton”). While the case itself is consistent with a long line of conflict-of-interest enforcement actions against investment advisers,^[2] what is notable is the complaint’s discussion about Bolton’s Wells submission. In short, the Commission criticizes Bolton for “fail[ing],” in its advocacy, “to acknowledge the wrongfulness of its conduct” and “offer[ing] no assurances that it would amend its written policies and procedures so as to be reasonably designed to prevent future . . . violations.”^[3] Continue reading →