Authored by CM Law Partner Jonathan Scott, this article breaks down what’s changed in the SEC Enforcement Manual and what it means for in-house counsel and executives.
Last week, the SEC’s Division of Enforcement issued a substantially revised Enforcement Manual – its first major update since 2017. For those of us who have served at the SEC and now represent companies and individuals under investigation, this is a significant development that has us closely comparing the new and old versions to see what is new, what is just reworded, and what we can read between the lines?
But even for in-house counsel and company executives, the revised Manual has value, both to better understand the SEC’s policies, practices, and terminology, and to appreciate how decisions companies make before and during investigations can significantly impact outcomes. The Manual may also provide some comfort that, in certain contexts, the current SEC and staff are committed to more transparency and considerations of due process.
The New Manual
When the SEC originally issued an Enforcement Manual in late 2008, it marked the first time the Enforcement Division had widely and publicly described certain standard investigative practices. But since then, the Manual has only been updated once (in 2017), so even changes to internal Enforcement policy predating the current administration have not been broadly disseminated in an organized and public way. Fortunately, one significant update contained in the new Manual is a commitment by the Enforcement staff to start updating the document annually, so we should not have to wait nine more years for the next version. In addition, while the Manual is not “law” or binding on the Enforcement staff, making these internal policies public makes them the default and should put additional pressure on the staff to justify exceptions.
But beyond publicly documenting existing practices, some policies in the new Manual reflect long-held desires of current SEC Chairman Paul Atkins that the Enforcement staff offer more transparency, fairness, and due process to witnesses and potential defendants.
Indeed, as far back as 2008, months before the Commission issued the original Manual, then Commissioner Atkins co-authored an article calling for several of the reforms that now finally appear in the 2026 version. He reiterated some of the proposals during a speech in October last year. And last month, Judge Margaret Ryan reinforced similar themes during her first speech as the SEC’s new Director of Enforcement.
So what is significant and new in the new Manual, what remains the same, and what can we expect going forward?
Wells Process
For almost 50 years, the SEC has offered potential defendants the opportunity to respond to staff allegations through pre-suit “Wells submissions” to the Commission. These submissions follow a “Wells call,” during which the Enforcement staff summarizes to defense counsel the high-level findings from the investigation and potential charges against their clients. One of Chairman Atkins’ most persistent concerns – dating back to his 2008 article, reiterated in his October 2025 speech, and often echoed by the SEC defense bar – is that prospective defendants have not always received reasonable time or meaningful access to the evidence against them, to effectively respond to potential charges.
The 2026 Manual substantially addresses this concern. Staff are now expected to be “forthcoming about the contents of the investigative file” and to “inform the recipient of the salient, probative evidence” that it may not know about. The Manual also establishes a four-week default for Wells submissions (versus a more typical two-week deadline) and provides that post-Wells meetings with senior leadership in the Division of Enforcement (in addition to frontline investigative staff) will be “typically granted.”
Staff already had discretion to extend deadlines, and in some offices have been open to sharing their files. But making these practices the default should lead to better outcomes for potential defendants and the Commission.
That said, the fine print is noteworthy. In Chairman Atkins’ October 2025 speech, he used mandatory language: staff “must” be forthcoming and “must” make every effort to share information. The Manual softens this to “should,” preserving staff discretion.
Judge Ryan’s February 2026 speech also reinforced both the opportunity and its limits. She emphasized the value of the Wells process as “an open, informed, and thoughtful dialogue” that benefits both sides. But she also warned the defense bar “not to mistake fairness for weakness,” noting that “deliberate circumvention of the process, including tactical tardiness and other games, will not be tolerated.”
Self-Reporting and Cooperation Credit
When companies uncover misconduct themselves, they often face the tough decision whether to self-report to regulators or prosecutors in the hope that – if there is ever an SEC or criminal action – they receive credit for cooperation in the form of reduced or eliminated penalties, or even an agreement to bring no charges whatsoever.
The new Manual provides clearer guidance on what the staff will consider “exemplary cooperation” by entities under investigation, including – in addition to self-reporting – summarizing internal investigation findings, identifying key documents and witnesses, translating foreign-language materials, and facilitating witness interviews. It also reiterates that SEC staff cannot require companies to waive attorney-client privilege as a condition of receiving cooperation credit (another focus of then-Commissioner Atkins article in 2008, when such demands were more common).
But notably, the Manual now includes language underscoring that companies that self-report misconduct will “rarely” get credit if the conduct has already been reported in the media or is under investigation by another government agency, which means that, particularly in matters that may become public by other means, time is of the essence. Of course, any decision whether to self-report will always depend on the specific facts and circumstances.
Formal Order Approval
As detailed in our recent article, What Happens When the SEC Calls, the SEC staff can take significant investigative steps by relying on voluntary document productions and cooperation from companies and individuals. But when companies or individuals cannot or will not turn over documents voluntarily, the staff needs to obtain subpoena authority via a statutorily required “Formal Order of Investigation.”
For decades, obtaining a formal order required the staff to send a memo to the full Commission. But in 2009, as a result of post-Madoff scandal reforms, the Commission “delegated” formal order authority to the staff, meaning that with appropriate supervisory sign-off, the Enforcement staff could issue subpoenas without explicit Commission approval. That process was tweaked during the first Trump administration to require that the approval come from the Director of Enforcement, rather than more junior officers. But in the early days of the current Trump administration, the Commission rescinded delegated authority altogether. The renewed requirement and new process for Commission approval is now memorialized in the Manual.
In most or all cases, when the SEC staff asks for subpoena authority, it will get it, even though it will take more time. It also remains quite possible that a future Commission may re-delegate formal order authority to the staff. But it is fair to assume that, at least through the end of the current administration, the pre-2009 process will remain in place.
Document Requests, Subpoenas, and Preservation Notices
One area where Chairman Atkins’ 2008 vision remains unfulfilled is document request reform. His 2008 article criticized “overly broad subpoenas” and “generic preservation notices” that impose unnecessary costs on companies – including third parties – that may never become defendants. He recommended requiring pre-approval of document requests by senior officials.
But the Manual contains no new requirement that document requests be reasonable or narrowly tailored, and no internal pre-approval process for requests to third parties except in unusual circumstances (e.g., requests to the media or law firms). So while companies that receive broad SEC subpoenas can continue to negotiate scope and deadlines, request rolling productions, and assert privilege, staff are not explicitly required to start off with proportionate requests.
The Manual does nevertheless contain new content regarding document requests and retention notices, with some updates to reflect technological advances. In particular, the Manual now defines the term “Documents” to include communications on platforms such as WhatsApp, Signal, iMessage, Teams, Discord, and Slack (although such materials have long been covered by standard SEC document requests and subpoenas). What is not explicitly mentioned is inputs to, or outputs from, Generative Artificial Intelligence, nor the use of GenAI by defense counsel to identify and produce responsive documents. Nor does the Manual address the SEC staff’s own use of GenAI as an investigative tool. It would not be surprising to see these topics addressed in future updates.
Investigation terminations
When an investigation is closed either in its entirety or as to certain parties, staff have typically been required to send case termination letters. In most instances, these letters have been sent only to parties who have reason to believe they are potential defendants. But consistent with recommendations by Chairman Atkins in his October speech, the new Manual encourages staff to send termination notices to parties that have made “significant [document] productions” in an investigation, in addition to those who simply “ask for such notices.” This should be helpful to companies that have put in place costly and disruptive internal document holds, but, absent a termination letter, might have no idea the investigation is over.
Chairman Atkins also suggested that staff be rewarded for quality work and judgment, even in instances where they close investigations. Perhaps these incentives are now being offered, but the practice is not referenced in the new Manual.
Going Forward
Despite the new Manual, the Enforcement staff still retains enormous discretion in how it conducts investigations. Its approach will typically be driven by the facts and circumstances of the matter, and the individual staff members’ experience levels, preferences, and personalities. But the fact that the Division has put more policies in writing, and that the current SEC Chairman and Director of Enforcement have endorsed a more transparent approach, suggests that — at least for now — companies and their counsel can expect more predictability, and perhaps additional due process and fairness.
We will continue to keep you updated as we see the policies in the Manual put into practice.
CM Law will continue to keep you updated as we see the policies in the Manual put into practice. In the meantime, if you have additional questions, please contact Jonathan Scott at jscott@cm.law or 844-285-4263, ext. 757.
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