A few days ago, the SEC announced it has updated its 115-page Enforcement Manual, with its first refresh in nine years. The Manual’s changes reflect the direction that SEC Chairman Paul Atkins and Enforcement Director Margaret Ryan have noted would be made to the Division’s policies and procedures since they got into office. As someone who wrote the “SEC Enforcement Handbook” for TheCorporateCounsel.net many years ago, I can appreciate practical guidance and I’ve always found the Enforcement Manual to be a great resource to help those on the outside comprehend the SEC’s enforcement program. And now the SEC has committed to updating the Manual annually going forward.
The primary changes to the Enforcement Manual include:
1. Standardized and Accelerated Wells Process – The SEC is formalizing clearer timelines and leadership involvement in the Wells process to promote fairness, consistency, and efficiency including:
- Wells recipients will ordinarily receive four weeks to submit a Wells response.
- Wells meetings will be scheduled within four weeks of submission.
- A senior Enforcement staffer – “Associate Director level or above” – will participate in Wells meetings.
- The goal here is to promote open dialogue, ensure timely decisions by Enforcement and conserve agency resources while advancing the SEC’s three-part mission: protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation.
2. Simultaneous Settlement and Waiver Review: The SEC has restored the practice of allowing parties to request simultaneous consideration of:
- An offer of settlement, and
- Related waiver requests (e.g., from automatic disqualifications or collateral consequences).
This increases transparency into the collateral effects of settlements, improves efficiency and conserves agency resources.
3. Enhanced Cooperation and Internal Process Framework: The updated Manual provides more detailed guidance than ever before on:
- How the Enforcement Division evaluates cooperation, including its effect on civil penalties.
- Improvements to internal collaboration and consistency.
- Updates to the formal order process.
- A refined framework for criminal referrals.
- Alignment with current Division best practices.
- Greater detail of these items in the Manual seems to indicate that Enforcement will give companies more credit for real cooperation.
Authored by
Broc Romanek