On February 24, 2026, the SEC enacted the first major overhaul of its Enforcement Manual in nearly a decade. While the headlines focus on “more time,” the update represents a fundamental shift in the agency’s philosophy under Chairman Paul Atkins: a move away from “tactical surprise” toward a system of structured, adversarial dialogue.
For regulated firms, including RIAs, ETF sponsors, and broker-dealers,this is a material recalibration of how enforcement risk is managed.
The Wells Process: Leveling the Playing Field
Historically, the Wells process was criticized as a “gotcha” game. Recipients were often given just 14 days to respond to complex allegations, frequently with little visibility into the SEC’s actual evidence. The 2026 Manual directly dismantles these structural asymmetries.
1. Doubling the Clock
The standard response window has been extended to four weeks (28 days). In investigations involving intricate accounting or cross-border transactions, this extra time is the difference between a rushed summary and a disciplined, evidence-based defense.
2. Mandatory Disclosure of Evidence
Perhaps the most significant strategic win for the defense is the new requirement for staff to share “salient, probative evidence” with the recipient. No longer forced to punch in the dark, firms will now know the specific facts the SEC is using to build its case. Furthermore, the Manual converts discretionary file access into an affirmative right, instructing staff to be “forthcoming” about the investigative record.
3. Senior Leadership Accountability
To ensure consistency and prevent “extreme legal theories,” a Wells notice now requires Director-level approval before it can be issued. Additionally, all Wells submissions are now guaranteed to reach the Commissioners’ desks, ensuring that the defense’s side of the story is heard at the highest level of the agency.
4. Formalized Post-Wells Meetings
The update mandates that meetings between the defense and the SEC occur within four weeks of a submission and include senior leadership at the Associate Director level or above. This ensures that decision-makers, not just line attorneys, are engaged in the dialogue.
Settlement, Waivers, and Cooperation
Beyond the Wells process, the 2026 Manual restores several industry-friendly practices that were abandoned during the prior administration:
- Simultaneous Consideration: Firms can once again request that the Commission consider a settlement offer and a related waiver (to avoid “bad actor” disqualifications) at the same time. This provides the “regulatory certainty” critical for firms managing investor mandates.
- The Cooperation Framework: The Manual formalizes a “Cooperation Committee” and provides a clearer roadmap for earning credit. However, it clarifies that mere compliance with subpoenas is not cooperation; the SEC is looking for proactive self-reporting and measurable remediation.
- Termination Letters: The agency is now required to send “closing letters” when an investigation ends without charges, providing much-needed closure for individuals and companies.
A Warning: “Fairness is Not Weakness”
While the tone has shifted, the bite remains. In her February 2026 speech to the Los Angeles County Bar Association, Enforcement Director Judge Margaret Ryan warned that the SEC is moving faster than ever.
“Deliberate circumvention of the process, including tactical tardiness and other games, will not be tolerated,” Ryan stated.
The agency is “de-politicizing” its work and rejecting “number chasing,” focusing instead on quality over quantity. The priority has shifted to high-impact fraud, specifically cases involving retail investor harm, insider trading, and market manipulation, rather than novel regulatory interpretations.
The Bottom Line: Preparation is Strategy
What your firm should do now:
- Update Wells response playbooks to reflect the four-week standard timeline.
- Reassess internal escalation thresholds for potential self-reporting.
- Align settlement modeling with waiver strategy.
- Ensure document retention and investigative protocols can withstand early scrutiny.
- Prepare executive teams for structured engagement at the Director level.
| Dimension | Pre-2026 Practice | 2026 Enforcement Manual |
|---|---|---|
| Standard Response Window | 14 days typical | 28 days standard, extensions permitted |
| Access to Evidence | Limited, discretionary disclosure | Required disclosure of salient, probative evidence |
| Internal Oversight Before Notice | Staff-driven initiation | Director / Unit Chief approval required |
| Commissioner Review | Not guaranteed in all instances | All Wells submissions provided to Commissioners |
| Post-Wells Engagement | Informal, staff-level meetings | Structured meeting within four weeks; senior leadership participation |
| Settlement & Waiver Review | Sequential and uncertain | Simultaneous consideration of settlement and waiver requests |
