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Access Management: Efficiency, Confidence, Control 
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SEC Termination of Mannatech Probe Shows Wells Power
A recent announcement by Mannatech Inc. concerning the termination of an SEC investigation against it and certain individuals shows the power of the SEC’s “Wells process.”
On September 5, 2008, Mannatech disclosed in a Form 8-K that the company, its CFO, and the Chairman of its Audit Committee had received “Wells notices” from the Staff of the SEC relating to the timing and completeness of Mannatech’s October 2007 Form 8-K disclosure regarding its dismissal of Grant Thornton LLP as its independent registered public accountants. For those unfamiliar with the term, a Wells notice is not something you want to receive from the SEC. As recently documented by the SEC’s new enforcement manual, the function of a Wells notice is to tell a person involved in an investigation that
1) the Division is considering recommending or intends to recommend that the Commission file an action or proceeding against them; 2) the potential violations at the heart of the recommendation; and 3) the person may submit arguments or evidence to the Division and the Commission regarding the recommendation and evidence.
A key part of the Wells process is the opportunity for the person or entity involved to present their arguments and evidence to the SEC with the goal of persuading the SEC not to proceed with the contemplated enforcement action. Although it is unusual for “Wells submissions,” as they are called, to convince the SEC to terminate an investigation and not proceed with an enforcement action, that result is achieved in some matters, including the recent Mannatech investigation.
Indeed, on November 4, Mannatech announced that following its receipt of the Wells notices in early September, it submitted a response to the SEC through the Wells process on October 3, 2008. Less than a month later, by letter dated October 31, 2008, the SEC wrote back with the good news that it had decided to conclude its investigation related to Mannatech and had determined not to recommend enforcement action against Mannatech, its any of the individuals.
These developments in the Mannatech investigation show the power of the Wells process, and the willingness of the SEC to back off of an investigation and a planned enforcement action when the person or entity involved can convince the SEC that doing so is appropriate.