The Southern District of New York ruled that Goldman Sachs could not be sued for fraud under federal securities laws for failing to publicly disclose that it had received a Wells notice from the Securities and Exchange Commission (the "SEC").  A Wells notice advises a potential defendant that the SEC staff intends to recommend that the SEC bring charges for violation of the securities laws.

Public companies in receipt of a Wells notice often are uncertain as to whether public disclosure is required given that a Wells notice is not a final determination by the SEC to take enforcement action.  The court held that there was no "automatic" obligation to disclose receipt of a Wells notice under the federal securities laws.  Instead, whether disclosure is required is a factual issue dependent upon whether the investigation covered by the Wells notice has matured to the point that litigation is apparent and substantially certain to occur.  

Richman v. Goldman Sachs Group, Inc., No. 1:10-cv-03461-PAC, slip op. (S.D.N.Y June 21, 2012)