SEC Updates Enforcement Manual: Process, Fairness and Efficiency in Focus

On February 24, 2026, the SEC Division of Enforcement (Division) announced the first major updates to its Enforcement Manual (the Manual) since 2017.¹ The updates appear intended to signal a change in tone within the Division through certain changes in process and references to fairness and impartiality. The updates also reflect centralization of program oversight and emphasis on efficiency in the allocation and management of Enforcement resources.

The updates formalize several policy changes made under Chairman Paul Atkins and Acting Chairman Mark Uyeda, some of which are a return to practices under the Jay Clayton administration. The updates also confirm longstanding practices in the Division that were not previously reflected in the Manual.

Below, we summarize our key takeaways from the revised Manual, which relate to the Wells process, waiver requests, formal order approvals, tolling agreements, criminal referrals, cooperation credit, and efficient case management by staff.

Wells Process: Standardized Timelines and Increased Transparency

The revised Manual incorporates and formalizes changes to the Wells process previously articulated by Chairman Atkins and Enforcement Director Judge Margaret Ryan, including

• a directive that the staff “should” — though on a “case by case basis” — “make reasonable efforts to allow the recipient of the Wells notice to review relevant portions of the investigative file”²
• a generally uniform four-week timeline for Wells submissions, which is longer than the previous two-week practice³
• a statement that post-submission meetings with senior leadership at or above the Associate Director level — but not necessarily with the Division Director — will typically be granted and scheduled within four weeks of receipt of a Wells submission⁴

Additional updates include Director approval before a Wells notice is issued and guidance on what makes Wells submissions helpful.⁵

Waivers: Simultaneous Consideration of Settlement Offers and Related Waiver Requests

The revised Manual incorporates the Commission’s return, in September 2025, to its prior practice during the Clayton administration 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.”⁶ This process change provides for greater certainty and predictability for settling parties. This practice tends to change administration to administration, depending on the party in power.

Formal Orders: Commission Approval Required

The revised Manual reflects the return, in March 2025, of the requirement that formal orders of investigation be approved by the Commission rather than by the Enforcement Director by delegated authority.⁷ 

Tolling Agreements: Enforcement Director or Deputy Director Approves Beyond First 90 Days

The revised Manual updates the discussion of statutes of limitation applicable in SEC actions to include post-2017 legal developments and imposes certain restrictions on the staff’s discretion to request tolling from persons involved in Enforcement investigations. Under the new provisions, and consistent with practice under the Clayton administration, an Associate Director or Unit Chief must approve an initial tolling request of up to 90 days, and the Enforcement Director or Deputy Director must approve any longer or additional tolling requests.⁸

Depending on how these approval requirements are implemented — and how liberally the approvals are granted — the new provisions may mark a shift toward swifter resolution of investigations (particularly in an environment of more limited resources), whether through more efficient investigations or through more proactive and timely closures of stalled or unproductive investigations.

Criminal Referrals: Expanded Discussion of Factors to Consider; Advance Notice to Enforcement Director Required

Consistent with the Commission’s 2025 policy statement on referrals to the Department of Justice (DOJ) and with prior practices, the Manual identifies factors Enforcement staff should consider in determining whether to refer potential violations to the DOJ or other criminal law enforcement authorities.⁹ It also creates a new requirement that for standard, nonurgent matters, the Associate Director or Unit Chief who determines to refer a matter to criminal authorities notify and receive an affirmative response from the Enforcement Director in advance of any such referral. For expedited matters, a more flexible notice process is permitted.¹⁰

Cooperation: Expanded Guidance; Spotlight on Zero-Penalty and Reduced-Penalty Settlements

The revised Manual includes additional guidance around the SEC’s process for evaluating and crediting cooperation. For example, the revised Manual now incorporates a list of examples of conduct that may constitute “exemplary cooperation” — though what constitutes cooperation in a given matter remains subjective.¹¹ Additionally, a new section on “Other Benefits of Cooperation” expressly highlights settlements with no or reduced monetary penalties as potential benefits of cooperation.¹² While the concept of a reduced penalty or a zero-penalty settlement itself is not novel, its prominence in the revised Manual may signal greater willingness by the Enforcement Division to recommend, and by the Commission to approve, such resolutions in a wider range of circumstances than under prior leadership.

Efficiency and Resource Allocation: Proactive Review of Top 5 Investigations and Expanded Bases for Closing Investigations

The Manual replaces the prior reference to “National Priority Matters” with a uniform requirement — generally consistent with past practices — that Associate Directors and Unit Chiefs regularly identify and review their “Top 5” priority matters, to focus resource allocation on the most programmatically significant investigations, identified based on a lengthy list of factors that include the egregiousness of misconduct, scale of actual or potential investor harm, the importance of sending a message of deterrence, markets and products involved, and others.¹³ In a related tonal shift, the revised section on closing investigations highlights resource allocation and adds to the list of possible relevant considerations that the conduct at issue may be “more appropriately addressed by another U.S. regulator or law enforcement authority, a foreign regulator, or through private litigation.”¹⁴ The staff are also directed to “continuously review the status of open investigations and send a termination letter when appropriate.”¹⁵

State Actor Doctrine: Added Reference to Investigations by Companies/Law Firms; Express Caution Not to Direct

Against the backdrop of post-2017 challenges to internal investigations as state actions, as well as to the enforcement powers of self-regulatory organizations (SROs), the revised Manual expands its discussion of the State Actor Doctrine to expressly highlight that investigations by companies or law firms (in addition to actions by SROs) may implicate state actor concerns. It also incorporates new language reminding staff not to direct or mandate the manner in which a private entity conducts its investigation.

Summary

The revised Manual appears to reflect a Division focused on procedural protections, fairness, centralized oversight, and efficient and decisive resource allocation. The shifts in focus and tone may signal greater openness to more flexible and expeditious resolutions, especially in cases involving cooperation or other mitigating factors.

¹ Press Release, U.S. Sec. & Exch. Comm’n, SEC’s Division of Enforcement Announces Updates to Enforcement Manual (Feb. 24, 2026), https://www.sec.gov/newsroom/press-releases/2026-20-secs-division-enforcement-announces-updates-enforcement-manual?utm_medium=email&utm_source=govdelivery.
² Div. of Enf’t Off. of Chief Couns., Sec. Exch. Comm’n, Enforcement Manual 2-24 (Feb. 24, 2026).
³ Id. at 2-23.
⁴ Id. at 2-25.
⁵ Id.
⁶ Id. at 2-27.
⁷ Id. at 2-15.
⁸ Id. at 3-36.
⁹ Id. at 5-88.
¹⁰ Id. at 5-89.
¹¹ Id. at 6-96.
¹² Id. at 6-103.
¹³ Id. at 2-17.
¹⁴ Id. at 2-30.
¹⁵ Id. at 2-32.