The SEC's Division of Enforcement just published its first comprehensive rewrite of its Enforcement Manual in eight years, advancing SEC Chairman Atkins' and Enforcement Director Judge Ryan's stated goal of ensuring a more transparent, fair, and efficient investigative process for individuals and companies under SEC investigation.
The February 24, 2026 update standardizes processes across the Division's offices and formalizes reforms to the Wells process—an area Chairman Atkins committed to overhaul in October 2025—while also refining the Division's approach to cooperation, coordinated settlement and waiver review, referrals to criminal authorities, and investigative closure practices. Together, these changes are intended to preserve robust enforcement while promoting predictability, earlier and more substantive dialogue between Enforcement staff and counsel, and enhanced procedural clarity.
Key Changes in the Updated Enforcement Manual
Standardization of the Wells Process: The updated Manual includes significant changes to the administration of the Wells process, through which SEC staff notify a party of their intent to recommend that the Commission authorize an enforcement action. The updates replace what had historically been largely discretionary practices with more defined guardrails. Among the key enhancements:
- A baseline four-week response period for Wells submissions
- Guidance on the form and content of a "helpful" Wells submission, including (i) accurately reflecting the evidence, legal issues, and precedent, focusing on disputed factual or legal issues; (ii) addressing legal elements and litigation risks; and (iii) submitting an expert report where applicable and additive
- Direction to staff to be forthcoming about investigation materials and to make reasonable efforts to allow review of relevant, non-privileged portions of the investigative file
- Additional structure around post-Wells notice meetings—requiring participation by senior Enforcement leadership and establishing timing expectations that meetings occur within four weeks of the Wells submission
Coordination of Settlements and Waivers: The updated Manual also reflects the Commission's restored practice of permitting settling parties to request simultaneous consideration of the offer of settlement and related requests for waivers from automatic disqualifications or other collateral consequences. Under this framework, staff must present the settlement offer and waiver requests together for Commission consideration. If the Commission accepts the settlement but rejects the waiver, staff must promptly notify the settling party and request a decision whether to proceed with the accepted portion. By embedding coordinated review into the process, settling parties will have clearer visibility into the full consequences of resolution.
Cooperation and Penalty Considerations: The Manual likewise refines the Division's approach to cooperation. While the core analytical frameworks for evaluating cooperation by individuals and companies remain intact, the update clarifies that the internal review of cooperation decisions runs through a Cooperation Committee and provides additional procedural guidance regarding cooperation agreements, deferred and non-prosecution agreements, and immunity requests. The updated Manual also underscores the Commission's discretion to reduce or forgo civil penalties in appropriate cases based on self-reporting, remediation, and meaningful cooperation. Notably, however, the Manual does not provide guidance about the composition and size of the Cooperation Committee, leaving the structure and dynamics of it undefined.
Referrals to Criminal Authorities: The updated Manual cites to the SEC's June 16, 2025 Policy Statement Concerning Agency Referrals for Potential Criminal Enforcement and lists the factors for the staff to consider in determining whether to refer potential violations to criminal law enforcement authorities. This includes (i) the harm or risk of harm to victims, (ii) the potential gain to the putative defendant, (iii) whether the putative defendant had specialized knowledge expertise, or was licensed in an industry related to the rule or regulation at issue, (iv) whether the putative defendant had knowledge of whether the conduct would cause harm or violate the law, (v) whether the putative defendant is a recidivist or is engaged in a pattern of misconduct, and (vi) whether the involvement of the criminal authorities will provide meaningful protection to investors.
Termination Letters: The updated Manual adds that staff are "encouraged" to send termination letters to any party who made significant productions in an investigation.
What This Means in Practice
For companies and individuals facing SEC scrutiny, these changes warrant closer attention to timing and advocacy strategy. In particular, the reinforced structure around the Wells process suggests that respondents may benefit from approaching the Wells stage as an opportunity to shape the record before charging recommendations are finalized. As Director Ryan emphasized during her first public remarks this month, a "compelling Wells submission can and may make a difference both at the enforcement recommendation stage and when the Commission is determining how to vote on an enforcement recommendation."
The updates also suggest that Enforcement staff may be more willing to engage and share information with parties and their counsel during the Wells process—a departure from past practices that defense counsel frequently criticized as limiting their ability to assess the strengths and weaknesses of the Division's positions, advise clients, and engage meaningfully in pre-suit settlement discussions. Those practices often varied by office, and sometimes even within the same office, adding to uncertainty in the process. Although the revised Manual does not guarantee expanded disclosure in every case, its direction to staff to be more forthcoming with investigative materials may promote more consistent and balanced information-sharing and a more productive Wells process.
More broadly, the Manual revisions reflect a concerted effort to bring greater uniformity, senior-level visibility, and procedural discipline to the investigative process. This dovetails with the Division's recent leadership reorganization, which replaced regional directors with deputy directors overseeing broader areas and increased centralized oversight from headquarters. Parties should expect more structured decision points and increased involvement from senior Enforcement officials at key stages.
The Manual will be revised annually moving forward, indicating that further refinements may continue as enforcement practices evolve. If you have questions about how these or future changes will impact your organization, please reach out to our Investigations and White Collar Defense Group.