In various fora, Securities and Exchange Commission Chairman Paul Atkins and Enforcement Director Judge Margaret A. Ryan have pledged to revamp critical parts of the Commission’s enforcement process to make it more fair, transparent, and efficient. [1] Chairman Atkins has stated that the SEC’s enforcement program “must be tempered by fair process, good judgement, and integrity,” and its success “depends substantially on the confidence of investors, market participants, and the regulated and legal communities that the SEC acts fairly and transparently in enforcing the federal securities laws.” [2]
Chairman Atkins and Judge Ryan have made good on that pledge. On Feb. 24, 2026, the SEC’s Division of Enforcement announced significant updates to its Enforcement Manual that formalize meaningful changes to the SEC’s enforcement program, including updating the process by which the Enforcement Staff obtain Formal Orders of Investigations, ensuring a consistent and uniform Wells process across the Division, facilitating simultaneous consideration of settlement offers and waiver requests, detailing the Division’s framework on evaluating cooperation, and establishing a new criminal referral process.
Chairman Atkins announced that these updates are “an important and long-overdue step that builds on the Division of Enforcement’s commitment to transparency, fairness, and process while ensuring it remains able to fulfil its mission.” [3] Similarly, Judge Ryan stated that the “updates to the Enforcement Manual ensure greater uniformity, reflect the Division’s best practices, and improve our staff’s ability to carry out the mission-critical work they do on behalf of investors.” [4] The Enforcement Division also committed to yearly reviews of the Enforcement Manual.
Formal Orders of Investigation
The Enforcement Manual now reflects changes to the Formal Order process implemented in March 2025. In 2009, the Commission delegated authority to the Director of the Division of Enforcement to issue Formal Orders of Investigation, which are necessary for the Enforcement Staff to issue subpoenas for documents and testimony. On March 10, 2025, the SEC amended these rules to eliminate such delegation of authority, reverting to the pre-2009 process under which Enforcement Staff was required to obtain Formal Order approval from the SEC Commissioners. [5] The updated Enforcement Manual reflects these changes to the SEC’s rules and now requires a multi-layered review process by which the Enforcement Division may obtain a Formal Order. The Director of the Enforcement must first approve the Staff’s request and then submit the request to the Commission for its review and approval. This change is likely to result in the issuance of Formal Orders of Investigation for matters that more closely align with current enforcement priorities and could impact the speed at which investigations commence.
A Unified SEC Wells Process and Dedicated Section for White Papers
In his Oct. 7, 2025, remarks at the A.A. Sommer Lecture, Chairman Atkins described significant procedural changes that he had directed the Enforcement Division to implement with respect to the Wells process. [6] The updated Enforcement Manual formalizes those changes. One of the more noteworthy updates is a more stringent approval process for the Staff to obtain permission to issue a Wells notice, which is a formal notification by the Enforcement Staff informing an individual or entity that it preliminarily intends to recommend that the Commission institute an enforcement action against them. Previously, Enforcement Staff were required to obtain an Associate Director or Regional Director’s approval before issuing a Wells notice. The Enforcement Manual now requires the Staff to obtain an Associate Director’s or Unit Chief’s approval, and then subsequent approval from the Office of the Director.
The Enforcement Manual also now provides for a four-week period for recipients of a Wells notice to provide a Wells submission, absent time constraints. Until now, entities and individuals receiving Wells notices often were given much shorter time periods to make a Wells submission, and the time afforded often depended on which SEC office was leading the investigation. The reformed Wells process requires the Staff, when sending Wells notices, to inform recipients of the “salient, probative evidence that the Staff has gathered or received, which the Staff may have or should have reason to believe may not be known to the recipient.” Wells notices will now include not only the specific charges that the Staff is considering, but also the types of relief that it seeks to recommend to the Commission.
The Enforcement Manual previously gave the Staff discretion to permit recipients of Wells notices to review the non-privileged portions of the investigative file, on a case-by-case basis. However, in keeping with the Commission’s commitment to fairness, transparency, and efficiency, the updated Enforcement Manual now directs the Staff to be “forthcoming about the content of the investigative file” and to “make reasonable efforts to allow the recipient of the Wells notice to review relevant portions of the investigative file,” on a case-by-case basis, subject to a few exceptions. Requests for a post-Wells notice meeting now typically will be granted after a Wells submission (although a Wells recipient will not be accorded more than one post-Wells notice meeting) and should be scheduled no later than four weeks after the Staff receives a Wells submission. The post-Wells meeting will include a member of senior leadership at the Associate Director level or above, which departs from prior Enforcement Director statements that senior leadership, such as the Director and Deputy Director, should not be expected at post-Wells notice meetings except in cases “that present novel legal or factual questions.” [7]
Further, the updated Enforcement Manual requires the Commissioners to receive a copy of the Division’s written recommendation, as well as any Wells submissions and White Papers that were accepted prior to the closed Commission meeting during which the Commissioners consider and vote on the Division’s recommendations. Previously, the Enforcement Manual stated that the Commission would consider the Staff’s recommendation, but it contained no requirement that the Commissioners receive the actual Wells submissions or White Papers before voting. These updates help to address the Commission potentially approving a settlement without the benefit of reviewing the Wells submission. Further, when the Staff rejects a Wells submission, the Enforcement Manual now requires the Commission to receive the Staff’s basis for rejection.
Relatedly, the Enforcement Manual now includes a separate section that provides guidance on substantive materials other than responses to Wells notices, such as white papers, legal memos, or letter briefs (collectively “White Papers”). Chairman Atkins has emphasized the importance of White Papers in the SEC’s investigative process, “particularly in cases where a potential respondent or defendant feels obligated to make a public disclosure of a Wells notice or to save on the costs of making a Wells submission.” [8] The inclusion of a dedicated section in the Enforcement Manual for White Papers highlights the Commission’s recognition of their importance to the enforcement process.
Simultaneous Review of Settlement Recommendations and Waiver Requests
The Enforcement Manual includes a new section that reflects the Commission’s September 2025 restoration of its practice of permitting a settling entity to request that the Commission simultaneously consider an offer of settlement and any related waiver request from automatic disqualifications and other collateral consequences that would result from the underlying enforcement action. [9] In such matters, the Staff will present for the Commission’s simultaneous consideration both the offer of settlement and the waiver request, along with recommendations from the relevant Divisions. In practice, this will permit a settling entity to assess its options when the Commission simultaneously considers a settlement offer and waiver request, and then subsequently accepts the settlement offer, but declines to approve the waiver request.
Credit Worthy Cooperation for Companies
The updated Enforcement Manual includes greater guidance on what constitutes exemplary cooperation and lists some of the specific factors that the Commission will consider when determining whether, and to what extent, it will grant leniency to companies for their cooperation during investigations. While prior versions of the Enforcement Manual directed the Staff to evaluate the Seaboard Factors [10] (self-policing prior to discovery of misconduct; self-reporting of misconduct when discovered; remediation; and cooperation with law enforcement), the Enforcement Manual now provides specific and actionable examples of what may satisfy the remediation and cooperation prongs of the Seaboard Factors. For example, in evaluating cooperation, the Commission will consider:
- Whether the company effectively remediated the issues, such as by:
- Taking 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.
- Whether the company provided exemplary cooperation during the SEC’s investigation, such as by:
- Summarizing factual findings from internal investigations;
- Summarizing interviews of witnesses located abroad;
- Identifying key documents 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/or
- Any other measures that meaningfully advance the Commission’s investigation.
The updated Enforcement Manual also adds language regarding self-reporting credit, clarifying that such credit is appropriate when a company reports before the Staff learns of misconduct from other sources and prior to imminent threat of disclosure or government investigation. It also specifies that credit will rarely be appropriate for conduct that has received media attention or is subject to investigation by another regulator.
New Criminal Referral Process
The Enforcement Manual references Executive Order 14294, [11] issued in May 2025, and the Commission’s subsequent Criminal Referral Policy Statement [12], which identified factors that the Staff should consider in determining whether to refer potential criminal violations to the Department of Justice. The Enforcement Manual incorporates and specifies some of these factors, such as the harm or risk of harm caused by the potential offense, the potential gain to the putative defendant from the offense, the putative defendant’s specialized knowledge, the putative defendant’s knowledge of illegality, whether the putative defendant is a recidivist, and whether the involvement of the Department of Justice or other criminal authority will provide additional meaningful protection to investors.
What Does This Mean?
Chairman Atkins and Enforcement Staff are staying true to Chairman Atkins’ “back to basics” approach to enforcement and promise that it is a “new day at the SEC.” The revised Enforcement Manual includes meaningful changes that impact the way the Enforcement Division and the Commission will interact with regulated entities, public issuers, and other market participants and their personnel by requiring a heightened level of overall fairness and transparency in the enforcement process.
McGuireWoods continues to monitor developments in SEC policy. For questions about recent changes to the SEC’s enforcement practices and priorities, or about responding to an SEC enforcement inquiry, contact the authors or a member of the Securities Enforcement & Regulatory Counseling Practice Group.
[1] Paul S. Atkins, Chairman, Sec. & Exch. Comm., Keynote Address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law (Oct. 7, 2025); Margaret Ryan, Director, Sec. & Exch. Comm. Div. of Enforcement, Remarks to the Los Angeles County Bar Association (Feb. 11, 2026). For more information on the then-intended changes to the Commission’s approach to regulation and enforcement, please see McGuireWoods’ article “A New Day at the SEC: Commissioners, Staff Declare Unified Approach to Regulation and Enforcement.”
[2] Atkins, supra note 1.
[3] Release, Sec. & Exch. Comm., SEC’s Division of Enforcement Announces Updates to Enforcement Manual, Release No. 2026-20 (Feb. 24, 2026).
[4] Id.
[5] Delegation of Authority to Director of the Division of Enforcement, 90 Fed. Reg. 12105 (Mar. 10, 2025).
[6] Atkins, supra note 1.
[7] Gurbir S. Grewal, Director, Division of Enforcement, Sec. & Exch. Comm., Remarks at SEC Speaks 2021 (Oct. 13, 2021). For more information on the previous Commission’s procedures and policies, please see McGuireWoods’ articles, “SEC Speaks 2021: New Enforcement Director Resolves to Restore Public Trust, Empower Staff,” and “SEC Speaks 2022: Ongoing Efforts to Restore Public Trust, Aggressive Enforcement Agenda.”
[8] Atkins, supra note 1.
[9] Paul S. Atkins, “Statement on the Simultaneous Commission Consideration of Settlement Offers and Related Waiver Requests, Sec. & Exch. Comm. (Sept. 26, 2025); In July 2019, Chairman Jay Clayton announced a process by which the Commission would consider settlement offers that simultaneously addressed enforcement actions and related waiver requests. See Jay Clayton, Chairman, Sec. & Exch. Comm., Statement Regarding Offers of Settlement (July 3, 2019); In February 2021, Acting Chair and Commissioner Allison Herren Lee announced that the Enforcement Division would no longer recommend to the Commission settlement offers that are conditioned on granting a waiver.” See Allison Herren Lee, Commissioner, Sec. & Exch. Comm., Statement of Acting Chair Allison Herren Lee on Contingent Settlement Offers (Feb. 11, 2021).
[10] Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, Exch. Act Release No. 44969, Accounting and Auditing Enforcement Release No. 1470 (Oct. 23, 2001) (SEC declined to take enforcement action against a company that had undertaken a series of remedial measures immediately after learning of misconduct, and the SEC identified thirteen criteria that the Commission will examine when determining whether, and how much, to credit self-policing, self-reporting, remediation, and cooperation).
[11] Exec. Order No. 14294, 90 Fed. Reg. 26292 (May 9, 2025).
[12] Policy Statement Concerning Agency Referrals for Potential Criminal Enforcement, 90 Fed. Reg. 26203 (June 16, 2025).