SEC Updates Its Enforcement Manual: What It Means for Advisers and Market Participants

On February 24, 2026, the SEC’s Division of Enforcement announced significant updates to its Enforcement Manual, the first comprehensive revision since 2017. The updated manual, dated February 24, 2026 reflects a renewed emphasis on transparency, procedural consistency, and internal efficiency within the Division.

While the Enforcement Manual does not create enforceable rights and is expressly non-binding, it serves as a critical roadmap for how enforcement investigations are initiated, conducted, and resolved. For investment advisers, private fund managers, broker-dealers, and public companies, these updates provide important insight into how the SEC intends to structure investigations going forward.

Below are the most significant developments and what they mean in practice.

1. A More Structured and Uniform Wells Process

The most notable updates focus on formalizing and standardizing the Wells process, the process that gives a firm or individual the opportunity to respond to an investigation before the SEC staff recommends enforcement against them.

Under the revised manual:

• Wells notice recipients will ordinarily receive four weeks to submit a Wells response.
• Wells meetings will generally be scheduled within four weeks of submission.
• A member of senior Division leadership will participate in the Wells meeting.
• The Manual now provides guidance on what makes a Wells submission most helpful.

The updated guidance also clarifies limitations on Wells submissions, including page limits, rejection grounds, and the prohibition on combining settlement offers with Wells submissions.

For firms and individuals under investigation, this is significant. The SEC is signaling that it wants a more predictable and disciplined pre-recommendation process. The inclusion of senior leadership in Wells meetings suggests that the Division is placing greater emphasis on ensuring internal alignment before recommendations reach the Commission.

For defense counsel and compliance officers, the takeaway is clear: Wells submissions must be strategic, concise, and focused on genuine factual or legal disputes. Boilerplate advocacy will carry less weight than targeted arguments addressing evidentiary gaps, litigation risk, or policy considerations.

2. Simultaneous Consideration of Settlements and Waivers

The updated Manual reflects the Commission’s restored practice of allowing a settling party to request simultaneous consideration of:

• An offer of settlement; and
• Any related waiver from automatic disqualifications or collateral consequences.

Historically, uncertainty around collateral consequences has complicated settlement strategy. By permitting concurrent consideration, the Commission increases transparency around the real-world impact of settlement terms.

For firms navigating enforcement risk, this development may improve predictability and allow for more informed decision-making at the settlement stage.

3. Clarification of Cooperation Frameworks

The updated Manual further details the Division’s analytical framework for evaluating cooperation, including its potential impact on civil penalties.

The Manual reinforces structured consideration of:

• Self-reporting
• Remediation
• Individual accountability
• Assistance to the staff

For advisers and fund managers, this underscores the importance of well-documented internal investigations and proactive remediation when issues arise. Cooperation credit is not automatic, it must be demonstrated, supported, and credible.

From a compliance perspective, firms should ensure that escalation protocols, documentation controls, and remediation frameworks are robust enough to withstand scrutiny if ever presented to enforcement staff.

4. Formal Order Process and Criminal Referrals

The Manual also updates guidance regarding:

• The formal order process (which empowers staff to issue subpoenas)
• Internal ranking and prioritization of investigations
• Referrals to criminal authorities

Notably, the Division continues to emphasize coordination with criminal authorities where appropriate. This reinforces that parallel proceedings remain an active enforcement tool.

For regulated entities, this serves as a reminder that an SEC investigation can quickly intersect with DOJ exposure, particularly in cases involving fraud, insider trading, market manipulation, or books-and-records violations with intent elements.

5. A Renewed Emphasis on Internal Discipline and Resource Allocation

The revised Manual codifies structured internal processes for:

• Opening and converting Matters Under Inquiry (MUIs)
• Ranking investigations
• Quarterly review procedures
• Resource allocation

While these may appear internal, they matter. Enforcement prioritization drives risk exposure. The Division’s emphasis on programmatic significance, harm to investors, and deterrent impact signals continued focus on cases with broader market implications.

For compliance professionals, this reinforces the importance of identifying and mitigating systemic risks, particularly in areas the SEC has previously identified as priority sectors (e.g., private funds, emerging technologies, cybersecurity, complex financial products).

What This Does — and Does Not — Signal

Importantly, this update does not represent a substantive rollback or expansion of enforcement authority. Rather, it reflects:

• A procedural recalibration
• An effort to increase transparency
• A commitment to consistency in investigative practices

Chairman Atkins and Director Ryan emphasized fairness, dialogue, and efficiency. The Manual’s annual review commitment also suggests that the Division intends to treat this as a living document rather than allowing another nine-year gap between revisions.

Practical Takeaways for Advisers and Firms

• Prepare for a structured Wells timeline. Four weeks is not long. Internal readiness matters.
• Elevate the quality of Wells advocacy. Focus on factual disputes, legal elements, and litigation risk.
• Assess collateral consequences early. Waiver strategy should be part of enforcement response planning.
• Document remediation carefully. Cooperation frameworks are increasingly formalized.
• Assume coordination with criminal authorities is possible.

Final Thoughts

For compliance officers, general counsel, and senior leadership, the updated Enforcement Manual provides a clearer view into how the SEC intends to operate its investigative function. Transparency in process does not reduce enforcement risk, but it does reduce uncertainty.

Firms that understand the mechanics of the enforcement process are better positioned to respond strategically, preserve credibility, and mitigate regulatory exposure.