Client Alert: The SEC Rewrote Its Enforcement Manual. Your Response Playbook Is Now Out of Date.
Date: August 21, 2026
Any firm that meets a 2026 investigation armed with yesterday’s playbook will forfeit meaningful strategic advantages.
Start with the Fine Print.
The Manual states, as it always has, that it creates no substantive or procedural rights. The disclaimer is accurate as far as it goes. Staff attorneys follow the Manual because their supervisors do, and a documented departure from the agency’s own published procedures is negotiating leverage even when it is not a legal defense. Know what the Manual promises, ask for it early, ask for it in writing and note the response.Five Changes That Matter.
First, the Wells clock doubled. The baseline period to respond to a Wells notice is now four weeks, up from two. Anyone who has assembled a persuasive Wells submission under the old baseline, marshaling testimony, reconstructing a trading record and drafting for an audience of Commissioners in 14 days, knows it forced a choice between speed and quality. Four weeks is still tight. But it is a baseline, not a ceiling, and an extension request now starts from a materially better anchor.
Second, you get to see more of the file. The revised Manual directs staff to share more of the investigative record during the Wells process—testimony transcripts, key exhibits and the evidence behind the proposed charges. For years, defense counsel has been forced to respond to Wells notices while seeing only a fraction of the staff's file. The new commitment narrows that asymmetry. A submission built on the actual record is a fundamentally different instrument from one drafted against a staff summary.
Third, every Commissioner now receives every Wells submission. Under prior practice, there was no assurance that the advocacy landed anywhere beyond the staff and the action memorandum’s summary of it. The submission is now, formally, an argument to the full Commission, the body whose majority vote is required to authorize an enforcement action. Write it that way.
Fourth, senior Enforcement leadership will meet with defense counsel before recommending an action, on timely request. Request this meeting in nearly every matter. It is the chance to test the staff’s theory with a decision-maker one level removed from the investigation, someone who has not spent 18 months building the case and may hear a proportionality argument differently.
Fifth, the Manual encourages early “white paper” engagement. A white paper submitted before charges crystallize can shape the theory of the case, or end it, at a stage when no Wells notice exists to be disclosed on a Form U4 or weighed for materiality under Item 103 of Regulation S-K. For associated persons especially, resolving a matter before a written Wells notice issues avoids a disclosure obligation that outlasts the investigation.
Second, you get to see more of the file. The revised Manual directs staff to share more of the investigative record during the Wells process—testimony transcripts, key exhibits and the evidence behind the proposed charges. For years, defense counsel has been forced to respond to Wells notices while seeing only a fraction of the staff's file. The new commitment narrows that asymmetry. A submission built on the actual record is a fundamentally different instrument from one drafted against a staff summary.
Third, every Commissioner now receives every Wells submission. Under prior practice, there was no assurance that the advocacy landed anywhere beyond the staff and the action memorandum’s summary of it. The submission is now, formally, an argument to the full Commission, the body whose majority vote is required to authorize an enforcement action. Write it that way.
Fourth, senior Enforcement leadership will meet with defense counsel before recommending an action, on timely request. Request this meeting in nearly every matter. It is the chance to test the staff’s theory with a decision-maker one level removed from the investigation, someone who has not spent 18 months building the case and may hear a proportionality argument differently.
Fifth, the Manual encourages early “white paper” engagement. A white paper submitted before charges crystallize can shape the theory of the case, or end it, at a stage when no Wells notice exists to be disclosed on a Form U4 or weighed for materiality under Item 103 of Regulation S-K. For associated persons especially, resolving a matter before a written Wells notice issues avoids a disclosure obligation that outlasts the investigation.
The Formal-Order Change Is the Sleeper.
In March 2025, the Commission rescinded the delegation that had allowed the Director of Enforcement to issue formal orders of investigation. See 90 Fed. Reg. 12,105 (Mar. 14, 2025). Formal orders, and with them subpoena power, once again require a majority vote of the Commission after multi-layered internal review. Matters under informal inquiry generally must close within sixty days or convert to formal investigations.For respondents, this changes the tempo and the map. An informal, voluntary-request-stage inquiry now carries a visible decision point, and the existence of a formal order tells you the Commission itself has authorized compulsory process. A related right predates these changes and remains underused: any person subpoenaed in a formal investigation “shall, upon request, be shown” the formal order. 17 C.F.R. § 203.7(a). Request it at the outset, read it closely and police every subpoena against its stated scope. Staff requests that wander beyond the order invite negotiation.
Cooperation Now Has a Rulebook and a Floor.
The Seaboard framework remains the foundation for cooperation credit. The 2026 Manual adds prescriptive frameworks for companies and individuals and creates a formal Cooperation Committee that must approve cooperation agreements, deferred and non-prosecution agreements, and immunity requests before any recommendation reaches the Commission. Timing controls self-reporting credit: the report must come before the staff learns of the conduct from another source, and that window closes without notice. The Manual also states expressly what defense counsel spent two decades arguing: truthful, complete, timely compliance with a subpoena is the minimum expectation and earns no cooperation credit by itself. Credit requires more. Privilege waiver, the Manual confirms, is not part of the price.On the back end, since Chair Atkins’s September 2025 statement, the Commission considers settlement offers and related waiver requests simultaneously. Respondents no longer accept a settlement while gambling on whether the collateral-consequence waivers will follow, and those waivers can be the difference between a resolved matter and a crippled business.
What to Do Now.
Start with the calendar. Docket the new process points in every matter: the sixty-day informal-inquiry horizon, the four-week Wells baseline and the leadership meeting. None of them arrive on their own, so request each in writing. Then build the cooperation record from the first day, because remediation completed before anyone at the Commission learns of the problem is worth far more than remediation begun after a Wells notice. Last, put every procedural agreement with the staff in writing. A Manual that confers no rights protects only the respondent who created a record.Ask yourself one question. A subpoena arrives tomorrow. Can your team immediately identify the formal order behind it, the scope it authorizes, and the deadlines it triggers? If the honest answer is “not without a meeting,” then hold that meeting today.
About Whiteford
Whiteford provides comprehensive business law and litigation services to clients ranging from innovative start-ups to middle market companies to Fortune 100 enterprises. With a growing footprint of East Coast offices from New York to Florida, and a new office in Denver, Colorado, we serve clients regionally, nationally and internationally.Dale Mullen, Andrew Bolton and Nicole Bemberis are attorneys at Whiteford. They advise broker-dealers, investment advisers and associated persons in SEC and FINRA examinations, investigations and enforcement proceedings.
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