US Securities and Exchange Commission Announces Important Revisions to Enforcement Manual

The US Securities and Exchange Commission (SEC or Commission) announced on February 24, 2026 comprehensive updates to its Enforcement Manual, marking the first revision since 2017. These changes, aimed at reinforcing “fairness and transparency,” modify certain investigative and settlement procedures and are expected to impact all entities subject to SEC enforcement actions.

The Enforcement Manual (Manual)[1] serves as the foundational guide for how the SEC’s Division of Enforcement (Division) conducts investigations and recommends enforcement actions. Under Chairman Paul S. Atkins, the Commission initiated a broad review of its enforcement protocols, culminating in substantial updates to the Manual. Moving forward, the SEC has committed to annual reviews of the Manual to ensure its procedures remain current and effective.[2]

Commenting on the updates, the director of the Division, Judge Margaret A. Ryan, noted, “Our updates to the Enforcement Manual ensure greater uniformity, reflect the Division’s best practices, and improve our staff’s ability to carry out the mission-critical work they do on behalf of investors.”[3] Generally, the updates increase transparency at certain critical steps in the enforcement process, formalize and make uniform existing practices, and reflect a commitment by the Commission to incentivize cooperation and remedial measures. Several of the key updates are summarized below.

UPDATES TO THE WELLS PROCESS

A significant focus of the updated Manual is the Wells process, which is the procedure through which parties to an SEC investigation are notified of potential charges and provided an opportunity to respond before the Commission proceeds. These changes were previewed by Chairman Atkins in an October 2025 speech, which we discussed in our October 2025 Enforcement Roundup.

Previously, the timing and structure of the Wells process varied significantly across different SEC regional offices and staff members, often resulting in unpredictability for respondents. Judge Ryan noted that the Manual’s changes to the Wells process are intended to give Wells recipients the time “to respond in a meaningful way” and also “underscore the importance of open, informed dialogue.”[4]

Under the new protocol, recipients of a Wells notice will “ordinarily receive four weeks to make Wells submissions,” a notable extension from the prior, often two-week, timeframe. The Manual also mandates that a meeting with senior leadership at the associate director/unit chief level or above “should” be scheduled within four weeks of receipt of a Wells submission, although there is no guarantee the meeting will be with the Division director or a deputy.

The updated Manual provides explicit guidance on the content and structure of Wells submissions. According to the updated Manual, accepted Wells submissions “are most helpful when they focus on disputed factual or legal issues, or raise significant legal risks or policy or programmatic concerns.” The Manual then provides an enumerated list of items that defense counsel should include in Wells submissions, even contemplating that an expert report may be effective “where charges are particularly complex or technical.” This increased uniformity is designed to ensure respondents have adequate opportunity to address legal and factual issues and to facilitate open, informed dialogue with the SEC.

As part of the post-notice Wells process, the updated Manual now also states that “[i]n the interests of increasing transparency and efficiency of the investigative process and the Commission’s deliberations, the staff should be forthcoming about the content of the investigative file.” However, the Manual maintains prior language indicating that recipients of a Wells notice will receive access to the investigative file only on a “case-by-case basis,” will only receive “relevant portions” of the file, and will not receive certain documents such as those that implicate whistleblower information.

These changes to the Wells process reflect Chairman Atkins’ emphasis on “due process, fairness, and transparency” in the Wells process.[5] Nonetheless, as Judge Ryan noted in a recent speech, the defense bar should not “mistake fairness for weakness” and that “tactical tardiness and other games . . . will not be tolerated.”[6]

Separate from the Wells process, the updates to the Manual formalize the standard practice of submitting white papers during the course of an enforcement investigation, and set a limit of 40 pages, not including exhibits.

SIMULTANEOUS CONSIDERATION OF POTENTIAL SETTLEMENTS AND WAIVER APPLICATIONS

As previewed by Chairman Atkins in his October speech, the updated Manual includes a restoration of the Commission’s prior practice of permitting simultaneous consideration of settlement offers and related waiver requests. This means that when a party seeks to resolve an enforcement matter, they can now request that the Commission concurrently consider any request for a waiver from automatic disqualifications or other collateral consequences that might otherwise result from the settlement.

According to the SEC, “these updates conserve Commission resources, enhance the transparency of its processes, and protect investors by driving significant efficiencies in the resolution of investigations.”[7] This procedural update gives parties greater visibility into the full implications of settling an enforcement matter, thereby reducing uncertainty.

ENHANCEMENTS TO COOPERATION AND REMEDIATION SECTIONS

The revised Manual also details enhancements to the SEC’s framework for evaluating cooperation and remediation efforts, including how those efforts may affect civil penalties. The updates confirm that the SEC is committed to considering a penalty reduction or imposing no penalty at all in instances of extraordinary cooperation.

Regarding self-reporting, the updated Manual notes that self-reporting credit is appropriate when a company reports misconduct prior to the staff learning about it from other sources, and that self-reporting credit is “rarely…appropriate” for conduct in the media or subject to investigation by another regulator. The updated Manual also lists a number of examples of “exemplary cooperation” and “effective remediation,” but reiterates that “[w]hen evaluating cooperation, the staff should consider ways in which the company provided assistance beyond what was required by law.”

Under a new heading titled “Other Benefits of Cooperation,” the updated Manual confirms that the Commission may impose a reduced penalty or no penalty where an entity engages in meaningful cooperation, self-reporting, and remediation. The section also outlines considerations that may warrant a reduced penalty against an individual as a result of their cooperation.

OTHER NOTEWORTHY UPDATES

In addition to the items described above, the Manual includes several other important updates.

• SEC staff are now “encouraged” to send termination notices to anyone who made “significant productions” to the SEC. This expands the universe of termination recipients, which continues to include those identified in the SEC’s Formal Order captions, those who submitted or were solicited to submit a Wells submission, those who asked for such a notice, or those who reasonably believed the staff was considering recommending an enforcement action against them. This greater notice will assist third parties, who are often navigating enforcement investigations with little information about the status of the investigation.
• Associate directors/unit chiefs can now approve the first 90 days of a tolling agreement, but any extensions beyond that must be reviewed and approved by the Division director or a deputy. This formalizes a practice the Commission has sometimes adhered to at various times in the past.
• The updated Manual encourages the use of document preservation letters, which some staff have used for a while, but formalizing the use and scope of these notices is new.
• Off-channel communications methods—such as iMessage and Signal—are now formally included in the definition of “document” for subpoenas and requests and these communication channels are similarly included as potential subjects of document preservation letters.
• SEC staff are encouraged to review background questionnaires prior to sending them to witnesses and may modify them for relevance to individual witnesses.
• The updated Manual reiterates the elements staff should consider when deciding whether to make a criminal referral, which can be found in the SEC’s June 16, 2025 Policy Statement Concerning Agency Referrals for Potential Criminal Enforcement. The criminal referral procedure is also outlined, and mandates that the decision to make a criminal referral be made by staff at the associate director or unit chief level or above. In urgent matters, the decision to make a criminal referral must be approved by an associate director or unit chief. In standard, non-urgent matters, the staff should first notify the Division Director and not make a criminal referral until the Director responds.
• In considering the potential closure of an investigation, consideration will be given to whether the conduct at issue is more appropriately addressed by another regulator, law enforcement authorities, or even through private litigation. Staff should also consider the presence or absence of US investors.

CONCLUSION

The updated Manual represents a meaningful shift towards greater procedural fairness, consistency, and transparency in enforcement proceedings. In particular, by standardizing the Wells process and clarifying the treatment of settlements and waivers, the Commission has provided market participants with enhanced predictability and efficiency in responding to investigations. Moreover, having clearly defined expectations for the SEC staff and members of the public should hopefully allow for greater focus on the significant factual, legal, and policy considerations at issue in investigations.