SEC Updates Enforcement Manual for the First Time in Nearly a Decade: Emphasis on Uniform/Consistent Processes and Transparency

On February 24, 2026, the SEC announced the first comprehensive update since 2017 of its Enforcement Manual, which provides internal operating guidance for the Division of Enforcement (the “Updated Manual”).¹ Although there are no sea changes to the SEC’s enforcement process, the revisions are designed to create nationwide consistency for and enhanced transparency regarding the SEC’s investigative and settlement procedures. SEC Chairman Paul Atkins and Enforcement Director Judge Margaret Ryan previewed many of the key updates in their public statements.²

Highlighted below are some changes with more significant implications for counsel and clients facing an SEC investigation.³

1. Wells Process: A More Structured, Uniform, and Transparent Pre-Charge Framework

The Wells process is the SEC’s longstanding practice of notifying parties of the Staff’s consideration of a recommendation that the SEC Commissioners authorize an enforcement action and affording the parties an opportunity to present factual, legal, and policy reasons why the posited enforcement recommendation should not proceed. Previously, the Wells process varied significantly across the Division and the changes highlighted below impose some uniformity to the process.

Division-level Approval Required. Under the Updated Manual, a Wells notice may not be issued without the approval of both (i) an Associate Director of Enforcement or Unit Chief and (ii) Director or Deputy Director.⁴ Although coordination and consultation with the Office of the Director previously occurred, now the most senior leadership of the Division will have an earlier and deeper involvement in preliminary charging decisions.

Disclosure of Key Investigative Materials. During the Wells stage, Enforcement staff operating under the Updated Manual are expected to provide proposed defendants or respondents with access to the core information the Staff believes supports the proposed claims.⁵ Historically, the Staff had significant latitude to decide whether to permit proposed defendants access to any investigative materials during the Wells process. The Staff practices varied widely with some Enforcement supervisors agreeing to allow counsel to review key transcripts and exhibits, and others providing only a high-level description of the potential charges, without meaningful insight into the evidentiary record supporting the Staff’s recommendation. The Updated Manual states that the Staff “should be forthcoming about the contents of the investigative file” and “should make reasonable efforts” to allow the recipient of the Wells notice access to “relevant portions of the investigative file.”⁶

Wells Submission. The Updated Manual provides that recipients of a Wells notice should “ordinarily receive four weeks to make Wells submissions” and are entitled to schedule a meeting with senior leadership at the Associate Director level or above within four weeks after the Staff receives the Wells submission.⁷ Previously, respondents were given only two weeks to respond to a Wells notice with the possibility of an extension, and senior leadership attendance in a Wells meeting was determined on a case-by-case basis. The Updated Manual reflects two changes: the first relating to Wells submission timing and the second to senior leadership participation in a Wells meeting.

The Updated Manual also provides guidance on the content and structure of Wells submissions,⁸ including recommending that Wells submissions:

• “Accurately reflect the evidence, legal issues, and precedent”
• “Focus on disputed factual or legal issues”
• Address significant legal risks or policy or programmatic concerns
• “Acknowledge and address evidence and precedent in support of the Staff's position, while highlighting exculpatory evidence and adverse precedent”
• “Address legal elements required to establish violations and explain why the evidence would not satisfy those elements”
• “Provide documents or citations to the investigative record or legal precedent to support key factual or legal arguments”
• Discuss Seaboard Report⁹ factors regarding cooperation, if applicable
• Consider including an expert report for complex or technical matters

These changes align with Enforcement Director Judge Ryan’s public remarks, when she explained that the goal of the revisions to the Wells process was that by “facilitating an open, informed, and thoughtful dialogue between staff and parties under investigation, we not only provide transparency and a fair opportunity to respond, but we also receive the benefits of zealous advocacy regarding the strengths and weaknesses of the case.”¹⁰ Practitioners should note that the Staff reserves the right to introduce Wells submissions in litigated matters.¹¹

2. Joint Consideration of Waivers and Settlements

The Updated Manual incorporates a September 2025 policy change¹² that restored the SEC’s prior practice of permitting a party to have the SEC consider simultaneously the party’s offer of settlement and any related request for waiver of automatic disqualification or other collateral consequences of an enforcement action.¹³ The updated process is designed to give a settling party certainty regarding whether the SEC will grant a waiver request. If, for example, the Commission is willing to accept the settlement, but not grant the waiver, the party will be notified and have an opportunity to withdraw its offer a settlement.¹⁴

3. Cooperation

The SEC’s framework for assessing a company’s cooperation during investigations, announced in its Seaboard Report nearly 25 years ago, is based on four factors: self-policing, self-reporting, remediation, and cooperation (the “Seaboard factors”).¹⁵ The Updated Manual formalizes these expectations and articulates them in greater detail. For instance, there is a detailed list of what the Enforcement Division considers to be exemplary cooperation and remediation efforts and explains how those efforts may affect civil penalties and charging decisions.¹⁶ The Updated Manual states that the Division may recommend that the Commission forego a civil penalty in whole or in part based on any of the four Seaboard factors.¹⁷

It is important to recognize that although the Updated Manual is designed to provide greater specificity and transparency about how the Division evaluates the Seaboard factors and how cooperation may be credited, the amount of credit given, if any, remains a qualitative, case-by-case judgment, rooted in Staff assessments of whether the party’s efforts genuinely advanced the investigation.

It remains to be seen how this will play out in practice. For example, in the SEC’s recent settled action against Archer-Daniels-Midland Company (ADM),¹⁸ the SEC stated that in accepting the settlement offer it considered ADM’s cooperation and significant remedial measures, which included ADM’s efforts to undertake an internal investigation, voluntarily report its findings to staff, and amend its policies and procedures to implement a new internal accounting controls. Yet, despite ADM’s robust cooperation and remediation, the settlement included fraud charges and a $40 million civil penalty. Thus, the practical ramifications of the Updated Manual’s amplification of the Seaboard factors remains unclear.

4. Additional Notable Updates

• The Updated Manual incorporates the Commission’s June 2025 policy statement concerning agency criminal referrals, following Executive Order 14294.¹⁹ The policy reiterates the six factors that staff should consider when deciding whether to make a criminal referral and mandates Director of Enforcement approval for any criminal referral.²⁰ Under prior policy, Associate Directors and Unit Chiefs were authorized to approve criminal referrals.
• The definition of “documents” sought by SEC subpoenas has been expanded to include messaging applications (WhatsApp, iMessage, Signal), communication platforms (Teams, Slack, Discord), and messages on personal devices.²¹ The previous definition only referenced standard electronic communications such as email. In practice, entities should evaluate their policies and procedures concerning the maintenance and retention of business communications conducted by employees on their personal devices.
• The Updated Manual encourages the Staff to continuously review the status of open investigations and send a termination letter where appropriate, including to parties who could reasonably believe the Staff was considering recommending an enforcement action against them or those who made significant productions of documents or information in an investigation.²²

Although the Updated Manual does not alter materially the SEC’s enforcement process, there are several procedural modifications that aim to increase transparency and consistency. Some of the modifications have practical implications for SEC practitioners and their clients, such as:

• The Enforcement staff nationwide ought to be more forthcoming during the Wells process and make available for review documents and testimony.
• The SEC has (i) established an internal group to evaluate cooperation and (ii) provided more detail concerning the factors that go into that evaluation.
• The SEC’s simultaneous consideration of settlement offers and waivers should reduce uncertainty when negotiating resolutions.

¹ Press Release, SEC's Division of Enforcement Announces Updates to Enforcement Manual (Feb. 24, 2026).
² See, e.g, Chairman Atkins, Keynote Address at the 25th Annual A.A. Sommer, Jr. Lecture of Corporate, Securities, and Financial Law (October 7, 2025); Margaret Ryan, Remarks to the Los Angeles County Bar Association (February 11, 2026).
³ The Enforcement Division retains discretion to depart from the Manual in certain circumstances, such as…
⁴ See, Updated Manual at 2.3.
⁵ See id.
⁶ See id.
⁷ See id.
⁸ See id.
⁹ See, Seaboard Report (Oct. 23, 2001).
¹⁰ See Hon. Margaret Ryan, Remarks to the Los Angeles County Bar Association (February 11, 2026).
¹¹ See, Updated Manual at 2.3.
¹² See, Statement on Simultaneous Commission Consideration of Settlement Offers and Related Waiver Requests (Sept. 26, 2025).
¹³ See, Updated Manual at 2.5.2.1.
¹⁴ See id.
¹⁵ See, Seaboard Report (Oct. 23, 2001).
¹⁶ See, Updated Manual at 6.1., 6.2.
¹⁷ See, Updated Manual at 6.1., 6.2.5.
¹⁸ Press Release SEC Charges ADM and Former Executives with Accounting Disclosure Fraud (Jan. 27, 2026).
¹⁹ See, Policy Statement Concerning Agency Referrals for Potential Criminal Enforcement (June 20, 2025).
²⁰ See, Updated Manual at 5.6.1.
²¹ See, Updated Manual at 3.2.7.3.
²² See, Updated Manual at 6.2.8.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Sharon M. Bunzel, an O’Melveny partner licensed to practice law in California; Lindsey Greer Dotson, an O’Melveny partner licensed to practice law in California; Andrew J. Geist, an O’Melveny partner licensed to practice law in New York; Mia N. Gonzalez, an O’Melveny partner licensed to practice law in New York; Michele W. Layne, an O’Melveny of counsel licensed to practice law in California; Benjamin D. Singer, an O’Melveny partner licensed to practice law in New York and the District of Columbia; Rebecca Mermelstein, an O’Melveny partner licensed to practice law in New York and New Jersey; Waqas A. Akmal, an O’Melveny counsel licensed to practice law in California; Vaishalee Chaudhary, an O'Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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