Summary
On February 24, 2026, the SEC Division of Enforcement released a comprehensive update to its Enforcement Manual (the “Manual”), the first such update since 2017. While the Manual is still non-binding Staff guidance and “does not constitute a rule, regulation, or statement of the Commission,” the update reflects significant revisions to Division formal policy. Division Director Judge Margaret A. Ryan described the changes as ensuring “greater uniformity, reflect[ing] the Division’s best practices, and improv[ing] our Staff’s ability to carry out the mission-critical work they do on behalf of investors,” while Chairman Paul S. Atkins called the revisions a “long-overdue step.”
The revisions span seven principal areas: (1) revised policies regarding the Wells process, including new approval requirements, an affirmative Staff obligation to provide key evidence to respondents, the conversion of discretionary file access into an affirmative right, mandatory rejection of noncompliant submissions, and new post-Wells meeting scheduling and attendance rules; (2) expanded action memorandum content requirements; (3) a new formal order approval process; (4) formalization of the Commission’s restored practice of simultaneously considering settlement offers and related waiver requests; (5) a new criminal referral framework codifying the Commission’s June 2025 Criminal Referral Policy Statement; (6) a tightened cooperation and self-reporting framework; and (7) modernized document preservation and production standards.
Key Amendments to the Enforcement Manual
The principal changes are as follows. The updated Manual reflects a series of reforms that span the full arc of an SEC investigation, from the initial preservation of documents through the Wells process, criminal referrals, and settlement. The principal changes are as follows.
- Wells Process. The Manual imposes a new dual-approval requirement from the supervising Associate Director or Unit Chief and the Office of the Director before a Wells notice may be issued or an enforcement action recommended without one. Staff must now affirmatively inform Wells recipients of salient, probative evidence gathered during the investigation that the Staff believes may not be known to the recipient. The prior Manual gave Staff discretion on a case-by-case basis to allow Wells recipients to review relevant, non-privileged portions of the investigative file; the updated Manual directs Staff to make reasonable efforts, on a case-by-case basis, to permit such review, thereby strengthening and formalizing the expectation of file access. The Manual retains the existing rule that generally no more than one post-Wells meeting will be granted, but newly requires that such meetings be scheduled within four weeks of receipt of the Wells submission and include a member of senior leadership at the Associate Director level or above. The Manual requires that Wells submissions and White Papers be rejected if they include discussion of settlement terms, are labeled as being subject to FRE 408 or limit the Commission’s ability to share files with other governmental agencies under SEC Form 1662. The prior Manual allowed Staff to reject a Wells submission or White Paper; the updated Manual makes rejection mandatory in each of those circumstances, changing “may reject” to “will reject.” Written Wells submissions are still subject to the existing 40-page limit (excluding exhibits), and that limit now applies to White Papers as well. The Manual also narrows the carve-out for Wells notices to situations involving specifically covert parallel criminal investigations, rather than any parallel criminal investigation.
- Action Memoranda. Action memoranda, submissions to the Commission before any enforcement action may be filed or instituted, must now include an objective discussion of the factual and legal basis for the recommendation, address significant evidentiary issues and litigation risks, engage with the primary arguments in any accepted Wells submissions and White Papers, explain whether a Wells notice was provided and, if not, why not, and describe the basis for rejecting any submissions. The prior Manual required Staff to identify counsel representing subjects of the proposed enforcement action so that Commissioners could assess potential recusals; the updated Manual expands this obligation to cover counsel representing parties and relevant witnesses as well.
- Formal Order Process. The Manual now requires that, to seek a formal order of investigation, Staff prepare and submit a memorandum describing the investigation and the need for a formal order, along with a proposed formal order, for review by the Division’s Office of the Director and approval by the Commission. If approved by the Commission, the formal order will be issued by the Office of the Secretary. This reflects the SEC’s March 2025 final rule revoking the prior delegations of authority to the Director of the Division of Enforcement (and at times also to various Division Senior Officers) to issue formal orders, which had been in place for approximately 15 years. The Commission stated that the change is intended to increase effectiveness by more closely aligning the use of investigative resources with Commission priorities.
- Simultaneous Settlement and Waiver Consideration. In September 2025, the Commission restored the practice originally established under Chair Jay Clayton of permitting a settling entity to request that the Commission simultaneously consider an offer of settlement and any related request for Commission waivers from automatic disqualifications and other collateral consequences arising from the underlying enforcement action. The changes to the Manual offer greater clarity of how the process, announced in September, will operate in practice. The Manual now provides that, in those matters, Staff will present for the Commission’s simultaneous consideration both the offer of settlement and the waiver request, along with recommendations from the relevant Division or Divisions. The Manual further provides that if the Commission accepts the settlement offer but rejects the waiver request, Staff will promptly notify the prospective defendant or respondent and request a decision, typically within five business days, on whether to proceed with the portion of the settlement offer the Commission accepted. If the prospective defendant or respondent does not promptly confirm its agreement to proceed, or otherwise withdraws its offer of settlement, Staff will determine whether to negotiate and recommend a new settlement or recommend a litigated proceeding.
- Cooperation, Self-Reporting, and Criminal Referrals. The Manual tightens the self-reporting framework, providing that credit will rarely be appropriate where the conduct has already attracted media attention or is under investigation by another regulator. The standard for recommending a non-prosecution agreement has been elevated from “limited and appropriate circumstances” to “exceptional circumstances,” with Cooperation Committee approval now required. On criminal referrals, the Manual integrates the Commission’s June 2025 Criminal Referral Policy Statement and incorporates six factors Staff must consider, including harm to investors, potential gain, specialized knowledge or licensing, the defendant’s state of mind, recidivism, and whether criminal involvement would provide meaningful additional investor protection. Staff generally will not refer conduct that appears to implicate only strict-liability civil offenses. For non-urgent matters, Staff must notify the Director before making a referral.
- Statutes of Limitations and Tolling. The Manual incorporates the FY2021 National Defense Authorization Act (NDAA ) limitations periods: five years for disgorgement generally; ten years for disgorgement in scienter-based violations; and ten years for equitable remedies including injunctions, bars, suspensions, and cease-and-desist orders. Tolling agreements now require tiered approval, with Associate Director or Unit Chief approval required for agreements up to 90 days and Director or Deputy Director approval required for extensions beyond that period. Staff must record and maintain applicable limitations dates in the Hub, an internal system for managing case information.
- Document Preservation, Production, and Resources. Preservation notices must now expressly address communications on personal devices and messaging platforms and must request written acknowledgment of receipt. The SEC Data Delivery Standards must accompany every document request and subpoena. The Manual strengthens existing post-production confirmation requirements, now directing Staff to seek written confirmation that all responsive materials have been produced and that withheld or redacted materials are reflected in a detailed privilege log after each production. When recommending a settlement, Staff must obtain a signed Certification as to Completeness of Document Production from the settling party. While the Certification requirement itself is not new, the Manual now requires that Staff communicate this obligation early in the investigation, including at the outset of settlement discussions, and reiterate it at counsel transitions. The prior “National Priority Matters” framework has been replaced by a “Top 5” docket system, under which Associate Directors and Unit Chiefs must identify priority matters on their dockets for resource allocation and oversight purposes.
Implications
The Manual update carries significant practical consequences for companies and individuals facing SEC investigation, and several of the changes merit particular attention.
Companies responding to SEC inquiries will now encounter a more formalized Wells process. Staff are required to disclose salient, probative evidence that recipients may not be aware of and to provide reasonable access to the investigative file, affording respondents greater visibility into the factual record before they submit a Wells response. Wells submissions will be due four weeks after Wells notices are issued, and post-Wells engagement with Staff will generally be limited to a single meeting, held within four weeks, and attended by senior Division leadership. These revised timelines suggest that the timing for the Wells process will likely be more condensed.
Changes to the Division’s approach to cooperation and self-reporting will have direct consequences for how companies evaluate whether and how to communicate with the Division when potential issues are identified. Self-reporting may lead the Commission to seek reduced civil penalties or forgo civil penalties entirely. The Manual specifies that self-reporting credit will “rarely” be available once conduct has received media attention or attracted investigation by another regulator, and that mere compliance with subpoenas carries no cooperation credit. The elevation of the NPA standard to “exceptional circumstances” further narrows the range of resolutions available to cooperating companies. Companies that seek to obtain the benefits of self-reporting will therefore need to act promptly to open a dialogue with Division Staff before media coverage or investigations materialize. When a potential issue is identified, executives will be required to respond swiftly and decisively. Decisions regarding when and whether to self-report are complex, and these changes heighten the significance of those determinations, which often must be made before all relevant facts are known.
The criminal referral framework, now incorporated in the Manual, governs when and how Staff will escalate matters to DOJ and other criminal authorities. The six enumerated factors provide a framework for assessing the likelihood of referral in any given matter, and the Director-notification requirement for non-urgent referrals introduces a procedural step that did not previously exist. Companies under SEC investigation that also face potential criminal exposure should be attentive to the sequencing constraints the Manual now imposes on information-sharing between the Commission and criminal authorities.
Finally, the changes relating to document preservation and production impose new baseline obligations on all parties under investigation. Preservation protocol must now expressly cover personal devices and messaging platforms. The Certification as to Completeness of Document Production, which settling parties must execute, is a material representation that the Manual directs Staff to flag at the outset of an investigation, at any change of counsel, and again when settlement negotiations begin.