SEC’s Division of Enforcement Issues Updated Enforcement Manual

On February 24, the SEC’s Division of Enforcement released its first comprehensive update of its enforcement manual since 2017, noting that reviews would be made annually going forward. While the enforcement manual represents non-binding SEC staff guidance rather than any new statutory requirement, it does reflect how the Division of Enforcement intends to conduct investigations, evaluate cooperation and exercise discretion.  In particular, the changes focus on updates to investigative procedures, such as revised policies for Wells investigations, which are SEC investigations that have progressed to the point that the Division of Enforcement staff is considering recommending an enforcement action to the SEC and a Wells notice is issued to the prospective respondent.  Additional changes relate to memorandum content requirements, self-reporting frameworks, and guidance on document requests, testimony and internal review and supervisory protocols, among others.  Registered fund directors may note that the updated enforcement manual reflects the SEC’s focus on procedural standardization in the enforcement process, and may wish to discuss with counsel or the fund CCO whether applicable fund policies and procedures are in alignment with current regulatory expectations.

Click here to read the SEC’s Press Release.

Click here to read the SEC Division of Enforcement’s updated enforcement manual.

Click here to read a client alert from Goodwin covering the updates to the SEC’s enforcement manual.