The Securities and Exchange Commission (SEC) has revised its Enforcement Manual for the first time since 2017. The updates codify procedural changes to the Wells process and simultaneous consideration of proposed enforcement action settlement terms and waiver requests that were previously announced in 2025. (See our prior updates here and here.) Other updates relate to the SEC’s cooperation framework, criminal referral considerations, and the formal order process. The SEC has also committed to review the manual annually.
Updates to the Wells Process
The Wells process involves formal notice from the SEC staff of the intent to charge a securities law violation, followed by written engagement with the targeted individual or entity about the legal, factual, and equitable merits of proceeding with an enforcement action.
The Wells process enhancements include:
- Expansion of the response period from two weeks to four weeks.
- Senior leadership (defined as an associate director) involvement in the Wells process.
- Sharing of “salient, probative evidence” gathered by the SEC staff as part of the Wells process.
- Guidance on the structure and content of Wells submissions.
- A four-week timeline for scheduling a post-Wells submission meeting.
Simultaneous Consideration of Settlement and Collateral Waiver Requests
The updated manual also formalizes the SEC’s restored practice of simultaneous commissioner consideration of settlement offers and related waiver requests associated with automatic disqualifications and other employment consequences arising from underlying enforcement actions.
Simultaneous consideration of enforcement terms and waiver requests affords potential respondents “greater visibility” into the collateral effects of settlement while conserving the SEC’s resources.
Other Updates
Cooperation and Remediation. The updated manual addresses how respondents and the SEC staff should think about cooperation and remediation credit, including:
- Self-Reporting. When an entity “promptly, completely, and effectively” discloses misconduct before the “imminent threat of disclosure or government investigation.”
- Remediation. When an entity demonstrates “effective remediation” measures, such as strengthening internal controls, clawing back compensation from responsible executives, and improving training.
- Cooperation. When an entity goes beyond mere subpoena compliance and assists the SEC staff by identifying and summarizing key evidence and providing forensic financial analyses, among other things.
Termination Letters. The SEC staff will send a notice that the commission will not conduct an enforcement action to anyone who made “significant productions in an investigation” to mitigate document preservation and compliance costs.
Tolling Agreements. Either the Enforcement Division director or a deputy is required to approve tolling agreement extensions beyond the first 90 days.
Document Preservation and Document Definition. The updated manual formally encourages the use of document preservation letters. The definition of “document” for subpoenas now includes off-channel communication methods, such as WhatsApp and Signal.
Criminal Referrals. The updated manual reiterates the elements set forth in the SEC’s June 16, 2025 Policy Statement Concerning Agency Referrals for Potential Criminal Enforcement, including the harm or risk of harm, pecuniary or otherwise, caused by a suspected offense, the potential gain to the offender, whether the putative defendant held specialized knowledge or was licensed, whether the offender knew the conduct would cause harm, and whether the offender is a recidivist.
If you have any questions, or would like additional information, please contact one of the attorneys on our White Collar, Government & Internal Investigations team.
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