SEC Revises Enforcement Manual for the First Time Since 2017

The Enforcement Manual serves as the Division of Enforcement’s internal reference guide governing the policies, procedures, and practices that the Division’s staff follows in investigating potential violations of the federal securities laws and litigating the SEC’s enforcement actions. The updated Enforcement Manual reflects significant substantive changes to how the Division opens, prioritizes, and reviews proposed enforcement actions, as well as how it evaluates cooperation by companies and individuals.

Formalized Approval and Review Processes for Investigations and Pre-Investigation Review

The 2026 Enforcement Manual centralizes decision-making authority within the Division’s director and introduces heightened procedural requirements for when the Division opens, conducts, and supports investigations. These changes include a revised Formal Order approval process, new requirements for opening and converting Matters Under Inquiry, expanded document preservation obligations, and updated guidance on statutes of limitations and tolling agreements. 

• Investigations and Formal Orders. The Enforcement Manual now requires Formal Orders to be approved by the Commission, removing them from the Division director’s delegated authority. Staff must submit proposed Formal Orders, the associated investigation memo, and the need for a Formal Order to the Division’s director. The director then submits to the Commission for approval. 

• Matters Under Inquiry. Staff must first determine whether there are any open examinations of the entities or individuals involved in a new matter under inquiry (MUI). These are less formal inquiries prior to a full investigation, which help the Division determine whether resources should be invested in an investigation. Under the revised Enforcement Manual, staff must identify any threshold issues of law or policy and consult with internal subject matter experts and internal liaisons before converting an MUI into a full investigation. 

• Document Preservation and Electronic Communications. A new section in the Enforcement Manual requires document preservation notices to explicitly request that organizations preserve all relevant communications sent or received on any and all messaging platforms and applications. This would include those sent or received on personal devices, and the Enforcement Manual specifically notes this would apply to platforms such as WhatsApp, iMessage, Signal, Teams, Slack, Discord, and Telegram. 

• Statute of Limitations and Tolling. The updated Enforcement Manual expands the statute of limitations section, noting that the five-year period is non-jurisdictional, and may be tolled. The Enforcement Manual incorporates the National Defense Authorization Act for Fiscal Year 2021, which extended the disgorgement limitations period from five to 10 years for securities laws violations requiring scienter. The revised Enforcement Manual now requires that tolling agreements be obtained before the statute of limitations expires and requires the associate director or unit chief approve agreements of up to 90 days, and Director or deputy director approval for extensions beyond 90 days. 

Heightened Oversight of Proposed Enforcement Actions and a Revamped Wells Process 

The 2026 Enforcement Manual has also changed the Wells process to provide increased transparency and more rights to entities under investigation. During the Wells process, corporations under investigation have an opportunity to present evidence to the Division that they believe will persuade it to decline prosecution. Key changes to the Wells process and case review include:

• Dual-Approval Requirement. Staff must now obtain both the approval of the supervising associate director or unit chief and approval from the director’s office before issuing a Wells notice or deciding to recommend enforcement action without one. The 2017 framework required only associate director or regional director approval. 

• Expanded Wells Notice Content. A Wells notice must now mention not only the specific charges contemplated but also the “type(s) of relief” the staff has preliminarily determined to recommend, giving recipients earlier and more detailed notice of the potential consequences they face. The Enforcement Manual also formalizes the “Wells call,” which is an oral advance notice by telephone, followed by the written Wells notice. 

• Default Four-Week Submission Period. The 2026 Enforcement Manual establishes, for the first time, a default four-week period for recipients to prepare and submit a Wells submission. This is an increase from the two-week period previously used by the Division.

• Greater Transparency in the Post-Wells Process. Division staff are now directed 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” that are not privileged or otherwise restricted. Additionally, the staff must now “inform the recipient of the Wells notice 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.” 

• Formalized Post-Wells Meetings. Post-Wells meetings must now be scheduled within a reasonable time after receipt of a Wells submission, “but in any event no later than four weeks after receipt,” and must include “a member of senior leadership at the Associate Director level or above.” 

• Strengthened Action Memo Process. Action memos are nonpublic documents that Division staff provide to SEC Commissioners, which include an investigation summary and enforcement recommendation. The action memo must now “provide[] a comprehensive and objective explanation of the recommendation’s factual and legal foundations,” “objectively address[] significant evidentiary issues, litigation risks, and the primary arguments in any Wells submissions and White Papers that were accepted,” and detail whether Wells notices were provided and explain any that were not. 

Enhanced Cooperation Framework and Incentives for Self-Reporting 

The 2026 Enforcement Manual also significantly bolsters the Division’s cooperation program in ways that underscores the importance of disclosing suspected wrongdoing early and assisting investigators throughout the process. Key changes to the cooperation framework include:

• New Cooperation Committee. A new Cooperation Committee now oversees and administers the program, and staff must seek Committee approval for all cooperation agreements, deferred prosecution agreements (DPAs), non-prosecution agreements (NPAs), and immunity requests. These decisions are, in turn, subject to approval by the director or appropriate deputy director. 

• Expanded Seaboard Framework Guidance. The 2026 Enforcement Manual provides more detailed guidance on the four pillars of the Seaboard framework: self-policing, self-reporting, remediation, and cooperation with law enforcement. 

• Self-Reporting Credit Clarified. The 2026 Enforcement Manual now expressly states that “self-reporting credit is appropriate when a company reports misconduct before the staff learns of misconduct from other sources and prior to imminent threat of disclosure or government investigation,” and clarifies that “self-reporting credit will rarely be appropriate for conduct that has already received media attention or is subject to investigation by another regulator.” 

• Concrete Corporate Remediation Examples. The 2026 Enforcement Manual provides, for the first time, concrete examples of “effective remediation,” including taking appropriate action against employees involved in misconduct, strengthening internal controls, clawing back compensation from responsible executives, making prompt corrective disclosures, hiring new financial and accounting staff, improving training, and retaining independent compliance consultants. 

• Reduced Penalties for Cooperation. A new standalone section on “Other Benefits of Cooperation” codifies the Division’s authority to recommend that the Commission forgo or reduce civil penalties against both entities and individuals for self-policing, self-reporting, remediation, and cooperation. 

• Publicizing Cooperation Benefits. The 2026 Enforcement Manual expands guidance on publicizing cooperation benefits, encouraging staff to “consider including a summary of the specific cooperation and remedial steps in the order or charging documents if such a disclosure would advance the goals of the cooperation program.” 

Key Takeaways and Next Steps 

The 2026 Enforcement Manual sends a clear signal that the Division is seeking greater internal oversight of enforcement recommendations, while simultaneously offering companies and individuals more structured opportunities to present their defenses during the Wells process and to earn meaningful credit for cooperation. AFS has experience working with entities as they evaluate whether to self-report, navigate the Wells process, and implement compliance and remediation programs. AFS can help corporate leaders as they consider the following steps:

• Evaluate self-reporting early. Companies that detect potential securities law violations should carefully evaluate the benefits of prompt self-reporting to the SEC before the Division learns of misconduct from other sources, as the window for self-reporting credit closes once the conduct has attracted media attention or a parallel investigation. 

• Invest in compliance and remediation. Companies should invest in robust compliance programs and be prepared to demonstrate concrete remedial steps. The Enforcement Manual’s new enumeration of remediation examples provides a practical checklist for companies to follow.

• Evaluate current communication and document retention policies. Now is the time to review staff communication policies and practices, and how those communications are preserved. The revised Enforcement Manual makes clear the Division will likely request that organizations preserve communications sent to multiple platforms and applications. Companies should ensure that their policies encompass more than just email, and cover communications sent via WhatsApp, iMessage, Signal, Teams, Slack, Discord, and Telegram.

• Leverage new Wells process protections. For entities and individuals that receive a Wells notice, the revised Enforcement Manual’s transparency provisions present new strategic considerations. Recipients should promptly request access to the investigative file and ensure they are prepared to engage in a post-Wells meeting with senior Division leadership within the four-week window. 

• Consider simultaneous settlement and waiver requests. The new simultaneous settlement-and-waiver consideration process — restored by the Commission in September 2025 — allows settling entities to request that the Commission consider a settlement offer alongside any related request for waivers from automatic disqualifications and collateral consequences, a development that may streamline resolution for regulated entities.