Introduction

The SEC’s Division of Enforcement (the Division) recently issued an updated Enforcement Manual (the Manual), its first comprehensive revision since 2017.¹ Although the Manual serves as staff guidance rather than as a rule or regulation, it significantly shapes how the Division investigates potential federal securities violations and frames enforcement recommendations to the Commission.

In part, the Manual consolidates policy and practice shifts made since the last version, including changes the SEC introduced or previewed during the past year.² Building on the Division’s stated “commitment to transparency, fairness, and process,”³ the central thrust of the updates reflects three consistent and practical themes: earlier and more substantive engagement, greater transparency and fairness in resolutions, and a more uniform and efficient process across matters. For companies and individuals facing SEC scrutiny, the Manual points to earlier and more meaningful opportunities for advocacy on the merits and to clearer pathways for positioning a matter for resolution or cooperation.

Engagement and Access

Perhaps the most impactful updates surround the so-called “Wells” process, through which parties under investigation can advocate against enforcement before an action is filed. Consistent with SEC Chairman Paul S. Atkins’s description of the Wells process as a “critical due process mechanism,”⁴ recipients should now have more information, time, and productive engagement with the Division at this critical pre‑proceeding stage.

Most prominently, Division staff are instructed to inform Wells recipients of “salient, probative evidence” that the staff has gathered or received (subject to confidentiality constraints), and that may be unknown to the recipient.⁵ The prior Manual gave staff considerable discretion on such access and there was a vast disparity among the staff as to when it provided access to investigative files and, if so, how much it made available. The new default is that staff “should be forthcoming about the content of the investigative file” and “make reasonable efforts” to share relevant, non‑privileged information not otherwise restricted.⁶ This is a meaningful shift. Earlier visibility into the staff’s evidence and internal files better equips recipients to identify weaknesses in the prospective case — such as evidentiary admissibility issues and witness credibility concerns — when there is still an opportunity to steer an investigation toward termination or a more favorable settlement.

The Manual also enumerates what makes a Wells submission “most helpful.”⁷ While the considerations generally do not break new ground (e.g., highlighting exculpatory evidence, addressing litigation risk and policy concerns, analyzing legal elements), the express qualitative factors should help parties focus on what matters most to the Commission. In addition, the Manual instructs that staff should give advance oral notice before sending a written Wells notice when feasible; recipients ordinarily have four weeks to respond, with extensions still available; and post‑submission meetings — described as “typically granted” and to be held within about four weeks — now include senior Division leadership.⁸ Taken together, the standardized timing, earlier access to evidence, and senior‑level engagement provide a more meaningful and informed opportunity to resolve or head off matters before an action is filed.

Transparency and Fairness

The Manual’s transparency focus extends beyond the Wells process. It reflects the restored practice (since September 2025) of considering settlement offers simultaneously with any related waiver requests — such as the loss of statutory safe harbors or other regulatory exemptions — giving parties clarity on collateral consequences at the time of decision and a five‑day window to withdraw if a waiver is denied.⁹ This welcomed coordinated approach promotes certainty for respondents and encourages efficient resolutions that conserve resources.

The Manual’s cooperation discussion is more specific and practical. The Division provides examples of what constitutes “effective remediation” and “exemplary cooperation,” including concrete expectations for internal fixes, accountability, and information sharing, and it clarifies that self‑reporting credit is available only when the conduct was not previously known to the Division, another regulator, or the media.¹⁰ The Manual also includes a new “Other Benefits of Cooperation” section explaining when reduced penalties, or none at all, may be appropriate.¹¹ These additions align with DOJ’s recent emphasis on encouraging companies to self‑report and cooperate (the subject of a prior alert), while building on longstanding SEC cooperation frameworks for companies and individuals to provide a clearer, consolidated set of cooperation guideposts.

Increased transparency runs both ways. Production letters should now describe how documents were identified and collected, including who was involved and which sources were searched, and privilege and work product assertions require greater specificity.¹² The Manual also makes explicit that “documents” include communications on modern messaging and collaboration platforms (e.g., WhatsApp, Signal, Teams, Slack) and materials on personal devices, reinforcing the need for early preservation and disciplined collection protocols.

Uniformity and Efficiency

The Manual channels more decisions through centralized leadership to foster coordinated assessments and greater efficiency. The Commission must now approve Formal Orders authorizing the use of subpoenas (incorporating a March 2025 policy shift revoking the Division’s delegated authority), and staff are directed to weigh whether subpoenas are genuinely needed.¹³ Staff are also instructed to consider threshold issues of law or policy and to consult internal subject matter experts before converting an inquiry into a formal investigation.¹⁴ The Manual requires approval from the Office of the Director to issue a Wells notice or to recommend an action without one, ensuring senior review before the case advances.¹⁵ The takeaway is a deliberate effort to curb premature escalation and unnecessary process, particularly for matters unlikely to garner Commission support, aligning day‑to‑day decisions with centralized priorities.

The updates also focus on forward progress and closure of stagnant or non‑priority matters. The Manual directs staff to “continuously review the status of open investigations and send a termination letter when appropriate,” and adds as a consideration of closing whether the conduct is better addressed by another regulator or through private litigation.¹⁶ That consideration echoes the DOJ’s Justice Manual guidance on evaluating alternatives to federal prosecution and speaks directly to prioritization and resource allocation.¹⁷ The Manual also formalizes the practice of associate directors and unit chiefs designating “Top 5” priority matters, updated quarterly, to keep resources concentrated on the most significant investigations.¹⁸

Conclusion

Taken together, these and other “long-overdue” updates to the Manual bring Division guidance in line with modernized practices, recent policy changes, and shifting objectives for the day-to-day operations of Division staff.¹⁹ But from the perspective of companies and individuals facing potential enforcement, the Manual provides important guideposts and potential opportunities.

Parties can expect earlier access to probative information and a more substantive, senior‑engaged Wells dialogue that can be used to test the merits and narrow or resolve issues at an earlier stage. The Manual’s clarified approach to simultaneous consideration of settlements and related waiver requests offers greater predictability in resolution planning, while the more detailed cooperation criteria provide a clearer basis for decisions about whether and how to self‑report and cooperate. And by emphasizing concentration on high‑priority, investor‑impact matters and discouraging unnecessary process, the Manual invites well‑supported Wells submissions that, among other arguments, explain why a particular investigation should not be treated as a priority.