What CFOs need to know about SEC enforcement updates

The Securities and Exchange Commission must’ve gotten word that 2016 is back. And then decided to add a year: Last week, the agency updated its internal enforcement protocols for the first time since 2017, which is sooo close to 2016.

The headline news from the update—an extended probe response timeline for recipients of Wells notices—will have implications for CFOs personally facing investigations, but it’s just as important to take a closer look at the fact the agency updated internal protocols at all, Rebecca Fike, partner in the regulatory and enforcement group at law firm Reed Smith and a former SEC attorney, told CFO Brew.

On your own. Individuals, including finance chiefs hit with a Wells notice, are likely going to feel the impact of the updated protocols the most, Fike said. That’s because the importance of a Wells notice has always had slightly different benefits for individuals versus firms.

Individual defendants “have every reason to want to take advantage of the Wells process. If you’re an individual CFO, for example, you could be facing, obviously, very bad collateral [damage], personal consequences…you’re going to want to fight back vigorously, so then you want the Wells [process],” she said.

“The most recent changes to the Wells process seem like an effort to make the enforcement process a little more transparent and user-friendly,” in Fike’s eyes.

“While the fact of the changes to the manual and changes themselves are important and substantial, many reflect long-held views or practices and are consistent with recent remarks from Commission leadership on the agency’s enforcement priorities,” three partners at Goodwin law wrote in a brief. “That aside, the changes do reflect an effort to make the enforcement process more efficient for all parties, and meaningfully more transparent for parties facing potential enforcement action by offering more visibility into the charges and evidence against them.”

And in that regard, Fike thinks individuals will especially benefit.

“For those of us who have actually been at the SEC, none of this was surprising or anything we hadn’t seen, asked for, or done before,” Fike said. “But if you were someone who wasn’t normally in this space, or didn’t actually work there, you might not know you could get extra time on your response, or you might not know you can request the attendance of a senior leader [in the SEC enforcement division],” Fike said, citing two of the main changes to enforcement protocol.

Why now? Just as important, however, is the glimpse that the protocol updates offer into how the SEC might operate under its current leadership.

“Usually, they use things like speeches and public statements to give guidance about the Wells process or other practices that the Division of Enforcement has, because [practices] do change with division directors and SEC chairs changing,” Fike said. “We don’t usually see that reflected in the manual itself, so that was more the surprise than the actual substance of it.”

So, why now? Take a look at who’s in charge.

During an October 2025 keynote address at Fordham School of Law, Atkins said that in his “35 years in and around the SEC, I can definitively say that Wells submissions can and do change the trajectory of enforcement actions—not in every case, of course, but in enough cases to matter.”

“The 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 continued.

In its protocol update announcement, the SEC also said the manual “will undergo yearly reviews going forward.” That could also signal a slight shift in outlook, Fike said.

“It just changes the baseline of ‘the enforcement manual exists, and it's rarely changed,’ into ‘[the] enforcement manual is a living document that we are evaluating along the way, and we may update every year, or at least we'll review it,’” she said. “I think it does indicate a willingness to change things that aren't working.”