On February 24, 2026, the Securities and Exchange Commission announced significant updates to its Enforcement Manual, revising the Division of Enforcement’s internal operating guidance for the first time in almost a decade. Most significantly, the updated Manual overhauls the Wells process to heighten Commission transparency. The new Wells procedure (1) mandates disclosure of salient evidence to Wells notice recipients; (2) requires Director-level approval before a Wells notice is issued; (3) doubles the standard response period for Wells submissions; (4) guarantees that all Wells submissions reach the Commissioners; and (5) requires that post-Wells meetings be held promptly and include senior leadership at the Associate Director level or above.
These changes are designed to promote fairness, transparency and efficiency in investigations conducted by the SEC, and reflect the current administration’s emphasis on the importance of voluntarily self-reporting and streamlining communication between regulators and regulated entities.[1]
The updated Manual introduces far-reaching changes to a process that has been criticized as opaque and unfair. Practically speaking, the updated Manual provides those within the crosshairs of the Commission enhanced opportunities to favorably resolve an investigation. This alert summarizes the practical implications for companies and individuals navigating SEC enforcement investigations.
Beyond the Wells process, other changes discussed below relate to the settlement process and a more detailed framework for evaluating cooperation.
Background: The Wells Process and Why It Needed Reform
The Wells process — named after John A. Wells, the chair of the committee that created it in 1972 — is the informal mechanism through which the SEC Enforcement staff notifies potential respondents or defendants of any charges the staff intends to recommend to the Commission for action. Following an investigation and evaluation of the evidence, the Enforcement staff typically issues a Wells notice to inform persons involved in investigations that they have made a preliminary determination to recommend that the Commission initiate proceedings against them. In theory, the Wells notice should identify the legal violations that the Commission will include in its recommendation. Recipients of a Wells notice may respond by providing a Wells submission concerning the proposed recommendation, explaining their position or mounting a defense. However, prior to the recent reforms, in practice, the substance of the SEC’s Wells notices often fell well short of the intended level of disclosure, leaving recipients with little to work with when preparing Wells submissions.
Historically, SEC Enforcement staff typically provided potential respondents or defendants little more than bare legal citations and a non-exhaustive list of potential remedies in Wells notices. In practice, it was left to the discretion of Enforcement staff whether to share evidence and legal theories with potential defendants and respondents. Deadlines were often as little as two weeks for defendants to respond, rarely enough time to mount a meaningful response in complex investigation. Wells submissions were sometimes withheld from Commissioners entirely when charges had evolved. And senior SEC leadership was often not engaged until after a Wells notice had already been issued.
For years, SEC Chairman Paul S. Atkins has stressed the importance of the Wells process and advocated for reform, noting that Wells submissions can and do change the trajectory of some enforcement actions. In a keynote address at Fordham Law School in October 2025, for example, he noted that 18 years prior, on the same platform, he had raised the need to refresh the Wells process. Mr. Atkins reasoned that “SEC staff do not always get things right the first time, and the Wells process is a valuable procedural device that helps to guard against plain mistakes, extreme legal theories, misinformation, biases and conflicts of interest.” He stressed that it was incumbent upon the Commission to modify its procedures.
Mr. Atkins laid out his core objection to the prior approach. To those who would object to the government’s sharing evidence with potential respondents or defendants, he posed a pointed question: “Why should we not?” The objective, he argued, is to get to the truth of the matter and hold people accountable in major, federal cases for significant violations. The Commission’s work “should not be a ‘gotcha’ game.”[2]
The recent updates to the Wells procedures reflect Mr. Atkins’ vision. “This is an important and long-overdue step that builds on the Division of Enforcement’s commitment to transparency, fairness, and process while ensuring it remains able to fulfill its mission,” he said in a recent SEC press release.[3]
Key Changes to the Wells Process
Greater Transparency: Evidence Sharing and File Access
Perhaps the most meaningful change for defense practitioners is the new requirement for the Division to share evidence with Wells notice recipients. Subject to confidentiality restraints, the updated guidance instructs Enforcement staff to 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.”
The updated manual also contemplates Wells notice recipients’ desire to review the Enforcement staff’s investigative file. In the interest of increasing transparency, the Enforcement staff is instructed to “be forthcoming about the content of the investigative file” and “make reasonable efforts to allow the recipient of the Wells notice to review relevant portions of the investigative file that are not privileged[.]”
Extended Timeline: Four Weeks for Wells Submission Now Standard
Under the revised policies, recipients of Wells notices are guaranteed a four-week time period to provide a Wells submission, and Enforcement staff also has discretion to grant extensions. The prior practice was that respondents generally had two weeks to prepare a Wells submission.
Heightened Oversight: Director Approval Now Required
The Enforcement staff is now required to first obtain an Associate Director’s or Unit Chief’s approval of proposed Wells notices, and is also required to obtain approval from the Office of the Director before issuing a Wells notice or determining to recommend an enforcement action without issuing a Wells notice. Closer scrutiny at this stage could result in more matters resolving before a notice is sent — and without the reputational, commercial and regulatory ripple effects that typically follow.
Commissioners Will Receive All Wells Submissions
The new rules provide that Wells submissions will be provided by Enforcement staff to the Commission along with any recommendation from the staff for an enforcement action against the recipient of the Wells notice.
Post-Wells Meetings: Now Timely and Supervised
Recipients of Wells notices may now request meetings with the staff to discuss the substance of the staff’s proposed recommendation after their Wells submission. Requests for a post-Wells notice meeting are typically granted, but a Wells recipient generally will not be afforded more than one post-Wells notice meeting. A post-Wells notice meeting should be scheduled to occur no later than four weeks after receipt of the Wells submission.
Additional Changes Beyond the Wells Process
The Enforcement Manual revisions also restore the Commission’s prior practice of allowing a party to request simultaneous consideration of a settlement offer and related request for waiver (such as waivers for disqualification or collateral consequences). This is a critical and welcome change given the significant collateral consequences that can follow a settlement on what appears to be favorable terms.
Additionally, the updates include further enhancements, such as: a more detailed framework for evaluating cooperation (including its effect on civil penalties); processes to encourage consistent internal collaboration; updates to the Formal Order process; and refreshed guidance on referrals to criminal authorities. The updates also call for Commission staff to send a termination letter when an investigation has been closed and the individual or company was meaningfully within the scope of the investigation unless senior Enforcement leadership explicitly approves withholding it.
Practical Implications
- Strategic Engagement Opportunities: With Wells meetings now being scheduled within four weeks and including senior Enforcement leadership, there is an increased opportunity for recipients of Wells notices to have meaningful dialogue with SEC staff. Thoughtful, early engagement can clarify investigative concerns, address misunderstandings and potentially influence staff recommendations on pursuit of enforcement action.
- Coordinated Settlement and Waiver Consideration: The restored practice of simultaneous consideration of settlement offers and waiver requests provides clearer insight into potential collateral consequences of a resolution and provides the opportunity for potentially more creative resolutions.
- Encouragement of Self-Reporting and Cooperation: The Manual’s clarified guidance on cooperation credit reinforces the administration’s broader policy objective of promoting voluntary disclosure and proactive engagement. Companies and individuals who self-report potential violations and demonstrate meaningful cooperation may benefit from favorable treatment in the Enforcement Division’s assessment of penalties and enforcement recommendations. Importantly, companies should expect the Commission to also look for measurable, in-the-works remediation plans when self-reporting.
- Internal Compliance Alignment: Organizations should review and update their compliance and internal investigation protocols to reflect the updated timelines, structured communication practices, cooperation guidance and document preservation and collection updates. Proactive planning can enhance both the efficiency and effectiveness of responses to potential enforcement inquiries.
Conclusion
Needless to say, these changes are a significant step towards leveling the playing field of the Wells process and beyond, or least making an extreme slope less severe, and could turn the process into a meaningful opportunity to change the course of a potential enforcement action.
Bracewell’s government enforcement and investigations and securities litigation teams have extensive experience guiding clients through every phase of SEC investigations, including the Wells process. If you are currently under SEC investigation, have received or anticipate receiving a Wells notice, or would like to understand how these developments may affect your exposure, please contact a Bracewell lawyer.
[1] For previous client alerts related to this topic, see DOJ Alert: New White-Collar Priorities and Stronger Incentives to Self-Report(discussing memorandum issued by Matthew Galeotti, Head of the Criminal Division at the US Department of Justice, announcing incentives for self-reporting); OFAC Launches Online Portal for Voluntary Self-Disclosure of Sanctions Violations(summarizing the advent of an online portal meant to streamline the process of self-reporting).
[2] See Keynote Address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law.
[3] See SEC’s Division of Enforcement Announces Updates to Enforcement Manual.
