On February 24, 2026, the Securities and Exchange Commission's (SEC) Division of Enforcement announced updates to its Enforcement Manual, the first such updates since 2017. As described by the SEC, the updates are "significant" and "overdue," and intended to make the Commission's enforcement process more transparent, efficient, and uniform. 

These changes to the Manual dovetail with SEC Chair Paul Atkins' efforts to make changes to the Enforcement Division, as many of the updates provide potential defendants with more time and a more concrete process to present their cases to the Commission. The Manual's update signals that Chair Atkins intends for the Division of Enforcement to act in a deliberate, transparent manner, and under the close supervision of senior officials, in contrast to what he has previously described as excessive enforcement under prior Chairmen. 

Although the Manual includes updates throughout, the Commission highlighted several significant changes that are covered in more detail below.

Updated Cooperation Framework for Companies

The Manual provides more detail regarding the Enforcement Division's framework for evaluating cooperation by companies. The updated Manual identifies the same "four broad measures of a company's cooperation" as the prior version – (1) self-policing; (2) self-reporting; (3) remediation; and (4) cooperation – but the updates provide additional detail in several categories. See Manual at 6-95 to 6-97. 

• Self-Reporting: The updates emphasize the importance of self-reporting prior to the discovery of misconduct. The self-report must happen "before the staff learns of misconduct from other sources and prior to imminent threat of disclosure or government investigation." Further, "self-reporting credit will rarely be appropriate for conduct that has already received media attention or is subject to investigation by another regulator."  

• Remediation: The updated Manual now lists several examples of "effective remediation": "[t]aking appropriate action with respect to employees involved in misconduct"; "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 for relevant personnel"; and "retaining independent compliance consultants to advise on other remedial measures."

• Cooperation: The updated Manual explains that "exemplary cooperation can include": "summarizing factual findings from internal investigations"; "summarizing interviews of witnesses located abroad"; "identifying key document and witnesses"; "translating foreign-language documents"; "providing detailed explanations and summaries of factual issues"; "providing financial analyses conducted by external experts"; "facilitating voluntary interviews of witnesses"; and "[a]ny other measures that meaningfully advance the Commission's investigation." See Manual at 6-96 to 6-97 (emphasis added).

Finally, apart from these categories, the updated manual adds a new section on the Enforcement Division's Cooperation Committee. The Manual states that Commission staff "should seek" the Committee's approval for all cooperation agreements, deferred prosecution agreements, non-prosecution agreements, and immunity requests. And the Committee's decisions are subject to the approval of the Director of the Enforcement Division. See Manual at 6-98.

Ensuring a Uniform Wells Process

The updated Manual includes significant changes to the Wells process, the formal procedure by which individuals or entities under investigation defend themselves before the Commission recommends legal action.

Additional approvals are now required before the Commission issues a "Wells notice," which alerts entities and individuals of the potential charges against them. Staff must obtain approval from an Associate Director "and then approval from the Office of the Director" before issuing a Wells notice or recommending an enforcement action without issuing a Wells notice. The Commission should also give advance notice, "when feasible," of its intent to send a Wells notice. See Manual at 2-21 to 2-25. 

The Manual now explicitly directs the Commission's staff to provide access to the evidence in the investigative file to the recipient of a Wells notice. While sharing evidence has often been a part of the historical Wells process, the Manual is now explicit on this point. For example, "[a]s part of the Wells process, staff should inform the recipient of the Wells notice of salient, probative evidence that the Staff has gathered or received," and – after the notice is sent – "the staff should be forthcoming about the content of the investigative file." 

Recipients of a Wells notice will now ordinarily have four weeks to make a "Wells submission," which is a voluntary response to the Commission's proposed recommendations. This is a noteworthy deviation from the 2017 version of the Manual, which did not provide a specific deadline for such submissions. The Commission believes this change will "encourage this dialogue and facilitate greater consistency in the Wells process." See SEC Press Release.

The updated manual also explains what makes a Wells submission most useful to the Commission's staff. The most helpful submissions are those that "focus on disputed factual or legal issues, or raise significant legal risks or policy or programmatic concerns. See Manual at 2-25. 

The updated Manual provides details regarding the timing of post-Wells notice meetings. The Manual now says that "[r]equests for a post-Wells notice meeting are typically granted," while continuing to warn that "a Wells recipient generally will not be accorded more than one post-Wells meeting." The update explains that these meetings should be scheduled "within a reasonable time" and sets a deadline no later than four weeks after the Commission receives the Wells submission. The update further specifies that these meetings will include "a member of senior leadership at the Associate Director level or above." See Manual at 2-27.  

Simultaneous Consideration of Settlements and Waiver Requests

The Manual outlines the process for giving entities under investigation a waiver from the consequences of an enforcement action, such as losing certain securities registration benefits, at the same time it weighs a settlement with the Commission. See Manual at 2-27.  

The Manual notes that the Commission recently "restored its prior practice 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 that result from the underlying enforcement action."  

The Commission retains discretion as to whether to grant these requests, however. If the Commission accepts a settlement offer, but rejects a waiver request, the Commission's staff will "promptly" notify the entity and request a decision, "typically within five business days," about whether the entity wants to move forward with the portion of the settlement offer accepted by the Commission. If the Commission does not receive a prompt response, it "will determine whether to negotiate and recommend a new settlement or recommend a litigated proceeding."

Referrals to Criminal Authorities

In addition to the updates described above, the Commission highlighted significant changes to its protocol for referrals to criminal authorities. 

In response to Executive Order 14294, which directed agencies to publish plans to address criminally liable regulatory offenses, the Commission adopted six factors its staff should consider in deciding whether to make referrals to criminal law enforcement: (1) "the harm or risk of harm caused by the potential offense"; (2) "the potential gain to the putative defendant"; (3) "whether the putative defendant held specialized knowledge, expertise, or was licensed in an industry related to the rule or regulation at issue"; (4) "whether the putative defendant knew the conduct would cause harm or that it violated the law"; (5) "whether the putative defendant is a recidivist or has otherwise engaged in a pattern of misconduct"; and (6) whether DOJ's involvement "will provide additional meaningful protection to investors." See Manual at 5-88.  

 If you would like to discuss the updates to the SEC's Enforcement Manual, the SEC's enforcement process in general, or any other securities enforcement issues, please contact the Miller & Chevalier attorneys listed below.

Joshua Drew, jdrew@milchev.com, 202-626-5811

Maria Elena Lapetina, mlapetina@milchev.com, 202-626-1586

Cody Marden, cmarden@milchev.com, 202-626-1495

Mena Sawyer, msawyer@milchev.com, 202-626-6078

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