In a series of revisions to its enforcement manual, the U.S. Securities and Exchange Commission (SEC) is setting out its new approach to investigations, settlement discussions, and crediting cooperation with the regulator.
The SEC’s enforcement division undertook the first comprehensive revision of its enforcement manual since 2017 that, it said, includes “significant updates” to various practices and procedures.
Among other things, the updated manual spells out a standardized approach to the use of so-called “Wells notices,” which are typically issued once the SEC staff has completed an investigation and is recommending enforcement action.
For instance, the manual spells out that respondents to these investigations will generally be given four weeks to respond to a Wells notice, and it provides guidance on making useful submissions to the regulator.
The SEC indicated that the updated processes and deadlines are intended to ensure that targets of an investigation will learn more quickly whether they are facing enforcement proceedings or not, and to help ensure that the SEC is using its enforcement resources efficiently.
Additionally, the manual has been updated to reflect the fact that the SEC will now consider settlement offers and requests for waivers from automatic sanctions that may result from an underlying enforcement action, simultaneously.
“By providing potential parties to an SEC action with greater visibility into the collateral effects of a settlement, these updates conserve commission resources, enhance the transparency of its processes and protect investors by driving significant efficiencies in the resolution of investigations,” the regulator said.
Additionally, the revised manual sets out the SEC’s current approach for evaluating cooperation by enforcement targets, and the potential impact of cooperation on any civil penalties that might arise from enforcement actions; changes designed to facilitate internal cooperation; and an updated framework for referrals to criminal authorities.
The SEC said that the revisions are “intended to enhance consistency and uniformity” in the enforcement division’s practices, and to enhance efficiency.
“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,” said SEC chairman, Paul Atkins, in a release.
The regulator also noted that the manual will now undergo yearly reviews.