For the first time in nearly a decade, the U.S. Securities and Exchange Commission’s Division of Enforcement (“Division”) released updates to its Enforcement Manual (“Manual”), emphasizing transparency and consistency in enforcement practices.
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The updated Manual introduces key changes to three areas: the process for issuing and discussing Wells notices, the simultaneous consideration of settlement offers and waiver requests, and the framework for evaluating cooperation and remediation.2 These revisions align with goals articulated by SEC Chairman Paul Atkins shortly after his appointment in April 2025, including the need for a fair and transparent Wells process and more realistic timeframes for submissions.3 The Commodity Futures Trading Commission (“CFTC”) similarly issued updated guidance earlier this year.4
Wells notice
A Wells notice issued by the Division informs a respondent in an investigation that the Division intends to recommend filing an enforcement action against the respondent. Typically, the recipient of the notice has been aware of the investigation for some time and had multiple interactions with SEC staff before receiving it. The Manual revises both the internal process for issuing Wells notices and how the SEC communicates with recipients.5
Additional approvals. Previously, Division staff were required to obtain approval from either an Associate Director or Unit Chief before either issuing a Wells notice or recommending an enforcement action without one. Under the new Manual, staff are now required to obtain additional approval from the Office of the Director.
Content of wells notice. A Wells notice must now inform recipients of the specific charges and the types of relief the SEC intends to seek. Reflecting the SEC’s stated transparency goals, staff must also inform recipients of “salient, probative evidence” that the staff has gathered, and which may not be known to the recipient, subject to applicable confidentiality restrictions. The notice must further set “reasonable limitations” on the length of any submission and, absent extenuating circumstances, provide four weeks for the recipient to respond.
Post-notice process. Two key changes affect access to investigative files and meeting timing:
Simultaneous settlements and waivers
The updated Manual also includes new guidance addressing simultaneous consideration of enforcement settlement recommendations and waiver requests.6 In September 2025, Chairman Atkins announced that the SEC would reinstitute its prior policy of considering settlement offers alongside requests for waivers from automatic disqualifications and other collateral consequences.7 The Manual now outlines how staff should present both matters together for the Commission’s consideration. Importantly, if the Commission accepts a settlement but rejects a waiver request, staff must promptly notify the prospective defendant or respondent to confirm whether the defendant or respondent still wishes to proceed with the settlement offer accepted by the Commission.
Cooperation and emediation
The Commission’s four-tiered framework for evaluating cooperation remains largely unchanged, but the Manual provides additional guidance on effective cooperation and remediation.
The Manual provides that when evaluating cooperation credit, staff must consider how respondent provided assistance beyond what was legally required. Relatedly, self-reporting credit, which previously included vague language as to when it would be applied, may now be appropriate when respondent “reports misconduct before the staff learns of the misconduct from other sources” and notes that such credit will rarely be appropriate for conduct that has already received media attention or is otherwise subject to investigation by another regulator. To further clarify the scope of what is required for cooperation credit, the Manual provides new examples of cooperation which include summarizing findings from internal investigations, facilitating interviews with witnesses located abroad, identifying key documents and witnesses, and translating foreign-language documents.
The Manual also provides examples of remediation, including clawing back compensation from responsible executives, hiring new financial and accounting staff to address accounting and disclosure issues, and retaining independent compliance consultants.8
Looking ahead
In its Press Release, the SEC committed to conducting a yearly review of the Enforcement Manual going forward. The updates reflect enforcement priorities previously articulated by Chairman Atkins and demonstrate the SEC’s commitment to transparency and collaboration with companies that affirmatively engage with the Division.
Footnotes
1. SEC’s Division of Enforcement Announces Updates to Enforcement Manual, U.S. Securities and Exchange Commission (Feb. 24, 2026)
https://www.sec.gov/newsroom/press-releases/2026-20-secs-division-enforcement-announces-updates-enforcement-manual.
2. The Manual can be accessed at https://www.sec.gov/divisions/enforce/enforcementmanual.pdf.
3. Keynote Address at the 25th Annual A.A. Sommer Jr. Lecture on Corporate, Securities, and Financial Law, U.S. Securities and Exchange Commission (Oct. 7, 2025) https://www.sec.gov/newsroom/speeches-statements/atkins-100925-keynote-address-25th-annual-aa-sommer-jr-lecture-corporate-securities-financial-law.
4. Further discussion of the CFTC’s Wells notice reform, along with background on the CFTC’s amendments to the Rules of Practice and Rules Relating to Investigations, can be found on our website. See CFTC Announces Reforms to Rules Of Practice And Investigations, A&O Shearman (Dec. 17, 2025) https://www.lit-wc.aoshearman.com/cftc-announces-reforms-to-rules-of-practice-and-investigations.
5. The Manual did not revise the definition of a Wells notice: a “communication from the staff to a person involved in an investigation that: (1) informs the person the staff has made a preliminary determination to recommend that the Commission file an action or institute a proceeding against the person; (2) identifies the securities law violations that the staff has preliminarily determined to include in the recommendation; and (3) provides notice that the person may make a submission to the Division and the Commission concerning the proposed recommendation.” Enforcement Manual, U.S. Securities and Exchange Commission Division of Enforcement at 2-22 (Feb. 24, 2026).
6.
See id. at 2-27.
7.
More information regarding the chairman’s announcement and restoration of the simultaneous consideration of settlement offers and consequence waivers can be found on our blog. SEC Restores Practice Of Considering Settlement Offers Conditions On The Issuance Of Collateral Consequence Waivers, A&O Shearman (Sept. 30, 2025) https://www.lit-wc.aoshearman.com/SEC-Restores-Practice-Of-Considering-Settlement-Offers.
8.
Enforcement Manual, U.S. Securities and Exchange Commission Division of Enforcement at 6-96 (February 24, 2026).
