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.
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:
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:
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:
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:
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:
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:
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
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.