SEC Enforcement Manual Update: Key Changes

Authors: C. Dabney O'Riordan, Nicole Love, and Dilvin Tayip

On February 24, 2026, the SEC Division of Enforcement (the "Division") updated its Enforcement Manual for the first time since 2017. The Commission characterized the updates as an effort to strengthen the Division's commitment to promoting greater transparency, consistency, and efficiency in investigations in service of the SEC's broader mission to protect investors, maintain efficient markets, and facilitate capital formation. The changes generally reflect either statements and practices that Chairman Paul Atkins had previously announced or, in many cases, were internal policy changes adopted years ago but not included in the manual.[1] With the changes formalized in the Enforcement Manual, defense counsel are better able to ensure consistency among the staff in following these new procedures, and the changes are more likely to endure into the future administrations. Below, we focus on key changes that concern how Division staff interact with defense counsel and will therefore impact strategic decisions and best practices for clients.

Key Changes

Wells Process: Greater Oversight and Transparency

The Wells process is the procedure by which potential defendants can provide substantive argument after the Division staff preliminarily decides to recommend that the Commission bring charges. This is a critical stage as it is the last opportunity for a potential defendant to convince SEC leadership, including the Commissioners, that certain defendants, charges, or remedies should not be pursued.

Over the last few administrations, as the Division sought to be more aggressive and push its investigations to conclusion, there had been growing disparity in how Division staff approached the Wells process-with some staff refusing to share information or provide reasonable time frames for a Wells submission. The changes summarized below should assist in a more consistent approach across the Division and allow for a more robust and constructive Wells process in keeping with Chairman Atkins' stated goal of a "balanced approach [that] serves the interest of justice and strengthens the integrity of our enforcement program."[2] That said, Division Director Judge Margaret Ryan has made clear that this should not be interpreted as unlimited process that can be abused. She underscored the importance of reaching conclusions within reasonable time periods and noted that, "[d]eliberate circumvention of the process . . . including tactical tardiness and other games, will not be tolerated."[3]

Dual Approval for Wells Notices. In addition to Associate Director or Unit Chief approval, the Manual now requires an additional level of approval from the Office of the Director for issuance of a Wells notice. The Manual does not discuss the level of detail to be provided, the factors to be considered by, or the level of review that will be undertaken by the Office of the Director.

Division Staff Sharing of Investigative Record. Upon issuing a Wells notice, the amended Manual provides that Division staff now "should" both (1) inform Wells notice recipients of "salient, probative evidence" gathered or received by staff that staff has reason to believe is not known to the recipient, subject to confidentiality or other constraints for sharing of information and (2) "be forthcoming about the content of the investigative file" and make reasonable efforts to allow the recipient to review relevant portions of that file. There are, of course, exceptions for documents that are privileged, would reveal a whistleblower or Bank Secrecy Act information, or contain information that is otherwise subject to confidentiality restrictions; however, these should be exceptions to the general approach of providing more of the investigative record.

Deadline for Wells Submission. For timing of the Wells submission, the Manual sets the default deadline for submissions at four weeks-doubling what had become standard practice of a two-week deadline. Again, this brings consistency to the fact that most, but not all, Division staff had historically granted reasonable extensions from the two-week deadline.

Content of Wells Submissions. The amendments include guidelines on effective Wells submissions-stating they are most helpful "when they focus on disputed factual or legal issues, or raise significant legal risks or policy or programmatic concerns." In addition, recommendations to discuss (as relevant) litigation risks, policy concerns, the Seaboard factors,[4] and expert reports are not new to practitioners, but it is, nonetheless, noteworthy that the Manual has explicitly identified them as helpful.

No References to Settlement Discussions or Offers. Consistent with prior practice, the amendments make clear the Division staff will reject a Wells submission that contains or discusses any settlement offers. Rather, if a party wishes to make a settlement offer to the Commission or address prior settlement discussions with the staff, they must do so in a separate document.

Wells Meetings. The amendments provide that post-Wells notice meetings are typically granted and should be scheduled within a reasonable time after the submission but, in any event, no later than four weeks after receipt of the Wells submission.

Settlement and Waivers: Reversion to Prior Practice

Consistent with the SEC's September 2025 announcement,[5] the amendments reflect the restoration of the agency's prior practice permitting simultaneous Commission consideration of an offer of settlement and related waiver requests from automatic disqualifications and other collateral consequences from the settlement terms. If the Commission accepts the settlement offer but rejects the waiver request, the prospective defendant or respondent will typically have five business days to inform the staff about moving forward with the portion of the settlement accepted by the Commission.

Preservation Letters: Modern Communications are Squarely in Scope

The amended Manual provides details of the Division's expectations to preserve documents upon receiving a request for documents from the Division staff. The key takeaways are that, when a company receives an SEC request, they should carefully prepare and distribute internally a preservation notification covering:

• All "documents," which the amendments provide include electronic communications such as texts and messages sent via messaging applications (e.g., WhatsApp, iMessage, Signal), communication platforms (e.g., Teams, Slack, Discord, Telegram), and messages sent or received on personal devices such as smartphones or tablets.
  
  
• "[A]ny and all messaging platforms and messaging applications," including communications on personal devices.

The preservation notice should also require an acknowledgement of receipt.

Remediation, Cooperation, and Self-Reporting: Detailed Expectations and Examples

The amended Manual provides a more detailed articulation of the Division's framework for evaluating a company's remediation, cooperation, and self-reporting and underscores the Division's openness to recommending reduced or no civil penalties in recognition of such efforts.

Remediation. Specific examples of "effective" remediation include disciplining wrongdoers, strengthening internal controls, clawing back compensation from responsible executives, making prompt corrective disclosures, hiring new financial and accounting staff to address accounting and disclosure issues, improving training, and retaining independent compliance consultants.

Cooperation. For cooperation credit, a party must provide assistance beyond what is required by law as opposed to only compliance with subpoenas for documents or testimony. Examples of "exemplary cooperation" include summarizing factual findings from internal investigations, identifying key documents and witnesses, providing detailed explanation and summaries of factual issues, and providing financial analyses conducted by external experts.

Self-Reporting. The Division views self-reporting credit as appropriate when a company reports misconduct before staff learns of it from other sources and prior to an imminent threat of disclosure or government investigation, and made clear that such credit will rarely be appropriate where the conduct already has received media attention or is under investigation by another regulator.[6]

Restriction on Directing Investigations. The amended Manual includes an explicit restriction prohibiting staff from directing how private entities conduct internal investigations to ensure that such private investigations do not cross the line into government action. This underscores that cooperation does not include taking direction from Division staff on how to conduct an internal investigation. While reiterating that private entities retain discretion over how to conduct an investigation, the amended Manual also notes that "indicia of the investigation's independence, thoroughness, and effectiveness [are] helpful indicators when deciding whether to credit an internal investigation's findings."

Other Noteworthy Changes

In addition to the key changes identified above, there are other changes in the 2026 Manual also worth noting.

Expanded Detail and Expectations on Privilege Logs. The amended Manual provides more detail on privilege logs. For example, for documents withheld on attorney-client privilege grounds, the log must include the identity of the attorney and client, and documents withheld on attorney work-product doctrine grounds must indicate what litigation the document was prepared in anticipation of. Previously, the Manual noted only that "staff should request a detailed privilege log" which left open room for some negotiation.

Continuous Review on Declination/Termination Notices. The amended Manual states that Division staff should "continuously review" open investigations and send termination letters when appropriate. Moreover, "[s]taff are also encouraged to send a termination letter to any party who made significant productions in an investigation to enable that party to determine that the matter has been closed." The Division's prior policy was to notify individuals and entities who were named in a formal order, had received a Wells notice, or who had requested a termination.

Criminal Referrals. The amended Manual incorporates the Commission's June 2025 policy statement that identified factors staff should consider when evaluating whether to refer potential violations to criminal authorities (including harm/risk of harm, potential gain, specialized knowledge, knowledge of illegality/harm, recidivism/pattern, and whether DOJ involvement provides additional meaningful protection to investors).[7]

Tolling Framework. In addition to noting that retroactive tolling agreements are disfavored, the amended Manual now documents the Division's years-long policy that Associate Directors and Unit Chiefs may only approve tolling for up to 90 days-with Director or Deputy Director approval needed for tolling longer than that.

Formal Orders. The amended Manual includes an update that formal orders of investigation must be approved by the Commission-which reflects the SEC's March 2025 final rule revoking its previous delegation of this authority to the Division Director.[8]

"Top 5" Lists. The amended Manual outlines the Division's years-long practice of senior officers designating "Top 5" priority matters on each of their dockets and to review and update those lists quarterly for more effective decision-making regarding resources and priorities. The criteria remain substantively unchanged-including, among other factors, whether there was misconduct by persons who owe fiduciary or other enhanced duties, widespread harm to investors, particularly vulnerable harmed investors, deterrence value including emergent market issues, and wrongdoing clearly prohibited under newly enacted legislation or rules.

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