From Wells notices to waivers: How the SEC’s updated Manual changes the game

By Sean Wilke, Head of Growth Strategy, Compliance, U.S.

The U.S. Securities and Exchange Commission (SEC)’s Division of Enforcement has rolled out meaningful updates to its Enforcement Manual that should be on the radar of every registered investment adviser and broker-dealer.

These changes, announced in February 2026, recalibrate how the staff conducts investigations, manages the Wells process, evaluates cooperation, and coordinates settlements and related waivers. While the Manual is a staff document and does not itself create enforceable rights, it’s one of the best windows into how the Division operates in practice.

This article highlights the key changes and their practical implications for advisers and broker-dealers managing SEC exposure and enforcement risk.

A modernized Manual and an annual review cadence

The Division’s Enforcement Manual had not seen comprehensive revision for several years. The SEC is now committing to review the Manual annually, with an eye toward aligning enforcement procedures with “current best practices” across investigations, case selection, and negotiations.

For firms, this means:

• You should treat the Manual as a living procedural framework, not a static reference
• Annual updates may gradually shift expectations around timing, communication and cooperation
• Compliance, legal and risk teams will need to periodically revisit internal playbooks for responding to SEC inquiries and investigations to ensure they remain aligned with evolving enforcement practices

From a governance perspective, the move to regular updates also signals that the Division is attuned to process fairness, transparency and predictability – issues that have been frequent points of concern for respondents and their counsel.

Wells process: more time, clearer expectations, and senior-level engagement

The most immediately relevant set of changes for advisers and broker-dealers concerns the Wells process. The Wells notice stage is often the first moment when a potential respondent gains a reasonably clear picture of the staff’s enforcement theory and contemplated charges. The Manual revisions meaningfully adjust this phase.

Expanded Wells response period

The updated Manual states that Wells notice recipients will ordinarily have four weeks to submit their Wells response, formalizing a longer and more uniform response period than was frequently observed in practice.

Practical takeaways:

• Firms now have a more predictable window to conduct additional factual analysis, refine legal arguments and decide strategically whether to submit a Wells response at all
• The extended default period should reduce the pressure to rush workstreams across internal stakeholders, outside counsel and third-party experts
• Nonetheless, “ordinarily” leaves room for shorter timeframes in exigent circumstances; firms should not assume the four-week period is absolute

Wells meetings with senior Enforcement leadership

The Manual also clarifies expectations for Wells meetings. The updated guidance provides that:

• Wells meetings should be scheduled within approximately four weeks after a Wells submission
• A member of the Division’s senior leadership will participate in those meetings

Implications for advisers and broker-dealers:

• The Wells meeting is now expressly framed as a structured opportunity to present legal and factual arguments directly to decision-makers with genuine influence over whether and how the staff recommends charges
• You should approach Wells meetings with a strategic narrative – not simply a rehash of the written submission. This is the moment to frame the matter as an outlier, a good-faith compliance misstep, or a case where charges or sanctions would be disproportionate
• Coordination between compliance, legal, and business leadership is critical. The presence of senior Enforcement officials makes it more important that the firm speaks with one voice and offers a coherent, credible path forward, including remedial measures

Emphasis on “helpful” Wells submissions

The updated Manual offers additional guidance on what makes a Wells submission “most helpful” to the staff. Although the specifics are couched in staff guidance language, the direction is clear:

• Submissions are expected to focus on key legal and factual issues – not broad rhetoric
• Respondents are encouraged to address core elements of alleged violations, scienter, materiality, investor harm, and remediation

For firms, this underscores the importance of:

• Early issue-spotting around the elements of potential violations
• A targeted approach that marshals evidence and remediation steps that directly speak to the staff’s theory of the case
• Avoiding overlong, unfocused submissions that can dilute strong arguments

Settlements and waivers: simultaneous consideration restored

Another important change for regulated firms concerns the intersection between enforcement settlements and collateral consequences, particularly automatic disqualifications that can attach under securities laws and related rules.

The revised Enforcement Manual reflects the restoration of a prior practice: allowing settling parties to seek simultaneous Commission consideration of the proposed settlement and related requests for waivers from disqualifications and other collateral disabilities triggered by that settlement.

Why this matters to advisers and broker-dealers:

• Settlements can trigger disqualifications under various provisions (e.g. “bad actor” disqualifications) that can inhibit participation in private offerings or other activities
• Being able to have the settlement and waiver considered in tandem provides clearer visibility into the full regulatory impact of resolving an investigation at the SEC
• It reduces the risk that a firm agrees to a settlement only to face later uncertainty or delay around critical waivers necessary for ongoing business operations

This change creates an opportunity – and an obligation – for firms to:

• Integrate consideration of collateral consequences into settlement strategy from the outset
• Ensure outside counsel and internal legal teams are coordinating enforcement negotiations with securities, corporate and business-line counsel who understand the operational impact of potential disqualifications
• Present waiver requests backed by robust compliance enhancements, governance improvements and, where applicable, independent oversight mechanisms designed to protect investors

Cooperation: clearer framework, direct impact on penalties

The updated Manual elaborates on how the Division evaluates cooperation and how that cooperation can affect charging and penalty decisions. While the SEC has long touted cooperation as a mitigating factor, the renewed focus signals that Enforcement wants to more clearly link behavior during an investigation with ultimate outcomes.

Key takeaways for firms:

• Timely self-reporting, proactive remediation and meaningful assistance to the staff – such as organizing data, making key witnesses available and providing factual analyses – can materially influence the staff’s recommendations
• The Manual underscores that cooperation is not merely refraining from obstructive conduct; it is affirmative conduct that meaningfully advances the staff’s fact-finding and protects investors
• For advisers and broker-dealers, this points toward the need for a structured cooperation framework embedded in internal investigation and escalation protocols. Firms should be prepared to decide quickly, in consultation with counsel, whether a particular issue warrants self-reporting and what remedial measures should accompany any approach to the staff

Firms that wait until late in an investigation to consider a cooperation strategy may find their leverage diminished. Having pre-defined “playbooks” for self-reporting and cooperation, calibrated by risk level and potential investor harm, can materially improve outcomes.

Internal processes, formal orders, and criminal referrals

The revised Manual also touches on several procedural aspects that, while less visible to the market, shape how investigations proceed:

• Internal collaboration and consistency: The Manual incorporates process changes aimed at more consistent treatment of similar cases across the Division’s units and regional offices. This can translate into more predictable enforcement approaches for similarly situated firms
• Formal order process: Guidance on the use and scope of formal orders of investigation has been updated, which can affect subpoena authority and information-gathering tactics in complex matters
• Referrals to criminal authorities: The Division has updated its framework for referring matters to criminal authorities, clarifying internal thresholds and processes

For advisers and broker-dealers, these changes have several implications:

• When confronted with a formal order, firms should assume that the staff is operating under more systematically defined internal criteria. This can shape how you assess the seriousness of the investigation and allocate resources
• The updated referral framework heightens the importance of early assessment of potential criminal exposure and the need to involve counsel experienced in parallel civil-criminal matters when circumstances warrant
• Improved internal consistency at the SEC may make prior public enforcement actions an even more useful guide in predicting likely outcomes, although each case remains highly fact-specific

Strategic considerations for advisers and broker-dealers

The Enforcement Manual revisions are more than mere housekeeping. Taken together, they represent an effort to:

• Enhance process transparency and perceived fairness
• Create clearer incentives for meaningful cooperation and remediation
• Provide more predictable timelines and structures for Wells and settlement discussions
• Rationalize the interplay between enforcement outcomes and collateral regulatory consequences

Advisers and broker-dealers should consider the following steps:

• Update internal playbooks: Ensure your enforcement response protocols reflect the new Wells timelines, meeting expectations, and cooperation considerations
• Integrate settlement and waiver strategy: Treat waivers as an integral component of settlement planning, not an afterthought
• Reassess escalation and self-reporting frameworks: Align internal thresholds and processes with the SEC’s renewed emphasis on cooperation and remediation
• Train key stakeholders: Provide targeted training for compliance, legal, and business leaders on the revised Manual, especially those who may participate in Wells meetings or settlement discussions

By proactively adjusting to these changes, firms can better manage enforcement risk, position themselves for more favorable outcomes when issues arise, and demonstrate to regulators a serious commitment to robust, investor-focused compliance.

Need some support?

Our U.S. regulatory compliance team is here to help. Click here to find out more about our deep expertise in SEC, NFA/CFTC and FINRA regulatory requirements and the comprehensive services we provide in this area. Or feel free to contact me directly to discuss any of the points covered in this article.