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On Oct. 7, U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins delivered a speech at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law at Fordham Law School, during which he announced updates to the Wells process and enforcement policies focused on enhancing fairness, transparency and consistency.<a id="_ftnref1" href="#_ftn1">[1]</a>

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Specifically, Chairman Atkins affirmed that when a request is made in a timely manner, defense counsel will be afforded a meeting with senior officials prior to an enforcement recommendation to the Commission; that potential respondents and defendants will be afforded at least four weeks, instead of the standard two weeks, to make a Wells submission; and that the Staff must be forthcoming about material in the investigative file.

Chairman Atkins also reaffirmed the simultaneous consideration of settlement offers and related requests for waivers from collateral consequences resulting from enforcement actions.

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As Chairman Atkins explained, the Wells process is the mechanism through which the Enforcement Staff notifies potential respondents or defendants of any charges and the basis for the charges, which the Staff intends to recommend to the Commission. The potential respondents or defendants are then provided with an opportunity to make a submission to the&nbsp;Commission, referred to as a Wells submission, setting forth their position on the subject matter of the investigation. Wells submissions are often a final opportunity for potential respondents or defendants to persuade the Staff that an enforcement action, either in whole or in part, is not warranted. As Chairman Atkins noted, Wells submissions also provide the Commission with a different, and potentially convincing, view of the facts and law concerning the matter. Chairman Atkins explained that the Wells process should be viewed as an extension of due process and fundamental constitutional rights that play an integral role in protecting citizens from “a powerful government agency that could become policeman, prosecutor, judge, jury, and executioner all in one.”&nbsp;

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Chairman Atkins stated definitively that Wells submissions can and do change the trajectory of enforcement actions and encouraged those who have the opportunity to give serious consideration to making a Wells submission. The SEC Staff does not always get things right the first time, and as Chairman Atkins described, the Wells process is a valuable procedural device that helps guard against mistakes, extreme legal theories, misinformation, biases and conflicts of interest. Chairman Atkins expressed his desire for the SEC to “get it right.” The SEC’s objective is to get to the truth of the matter to hold people accountable and not play a “gotcha” game. He further noted that potential respondents or defendants have a shared interest in accuracy but, absent a meaningful and fulsome Wells process, are disadvantaged by a lack of access to the investigative record and the specific concerns of the Enforcement Staff.

With these concepts in mind, Chairman Atkins expects that the Enforcement Staff, in giving a Wells notice, will provide sufficient information for potential respondents or defendants to understand the potential charges and, importantly, the evidentiary basis for those charges, such as testimony transcripts and key documents. The Staff is expected to be forthcoming about materials in the investigation file. This direction to the Staff to share the evidentiary basis for its recommendation, including testimony transcripts and key documents, is a long-requested and significant improvement to the Wells process. Chairman Atkins also addressed the timing of Wells submissions and noted that the Staff must be realistic about time periods for submissions, especially in long, complicated cases. He confirmed that going forward, the Staff will provide potential respondents or defendants with at least four weeks to make the Wells submissions.

Additionally, Chairman Atkins noted that when a request is made in a timely manner, senior enforcement leadership will meet with defense counsel before making a recommendation to the Commission. However, this does not necessarily mean&nbsp;that defense counsel will be afforded multiple meetings. Chairman Atkins also referenced the “white paper” process as another means to address concerns about factual or legal issues in an investigation, particularly in cases where a potential respondent or defendant feels obligated to make a public disclosure of a Wells notice or to save on the costs of making a Wells submission. Like written Wells submissions, white papers are provided to the Commission for their review and consideration.&nbsp;

The Wells process usually occurs at the end of an investigation, but Chairman Atkins stated that it should not be the only opportunity for the Enforcement Staff and potential respondents or defendants to discuss the direction of an investigation. Early engagement is encouraged when, for example, a potential respondent or defendant believes the Staff is operating under a mistaken view of the facts, which could save both sides time and resources.&nbsp;&nbsp;&nbsp;

Simultaneous Consideration of Settlement Offers and Requests for Waivers

Chairman Atkins also discussed a change in another SEC process that implicates fairness and transparency – the simultaneous consideration of settlement offers and related requests for waivers from collateral consequences resulting from enforcement actions. These collateral consequences include, for example, loss of well-known seasoned issuer status and loss of private offering exemptions under Regulations A, D and Crowdfunding. The Division of Enforcement and the policy Divisions, for example the Division of Corporation Finance, will now present an offer of settlement in an enforcement action with a contemporaneous waiver request to the Commission for simultaneous consideration, unless the Commission determines that it wishes to consider them independently.&nbsp; &nbsp;

Transparency and Consistency in Enforcement Processes

Chairman Atkins noted that the SEC’s enforcement program is an exercise of government power that must be tempered by fair process, good judgment, integrity and rectitude. As the resources are limited in any organization, including the SEC, hard decisions must at times be made as to which matters merit an enforcement action. In the past, Chairman Atkins noted, the SEC has seen examples of enforcement actions in areas, such as the retention of books and records, which consumed excessive Commission resources not commensurate with any measure of investor harm. Going forward, the SEC is expected to pursue cases of genuine harm and bad acts and will view cases of benign or innocent actions differently.

Chairman Atkins believes the agency should strive for enforcement processes that respect the rule of law, provide predictability and protect the rights and interests of those with whom the SEC interacts. These processes should ensure that the SEC acts efficiently to conduct investigations and determine whether to recommend enforcement actions or close matters without delay or unnecessary publicity. The processes should ensure that the SEC seeks to impose penalties and other relief that are appropriately tailored to the misconduct at issue, within statutory limitations, and without adding further to shareholder injury. Commission orders should provide the public with enough information to understand why the conduct violated the federal securities laws and why particular relief was imposed. Practices for issuing termination and closing letters should sufficiently permit potential respondents or defendants, as well as recipients of document requests and subpoenas, to understand an investigation has concluded. The Commission should clearly explain both the procedures by which individuals who are subject to associational and penny stock bars can seek reinstatement, and the standards that the Commission will apply in assessing their applications. The processes should also ensure that the SEC achieves consistent results, regardless of which office or unit conducts an investigation or litigates an enforcement action. Finally, the processes should ensure that the SEC avoids information silos and fragmented thinking and that the work of the Division of Enforcement reflects the regulatory and policy objectives of the Commission.&nbsp;

In his remarks, Chairman Atkins continued to signal a shift from certain practices of the prior administration and an emphasis on a Division of Enforcement that enforces the federal securities laws with fairness and transparency. This is consistent with Chairman Atkins’ selection of a judge for the role of Director of the Division of Enforcement. Rather than the historical selection of a prosecutor for this role, this selection speaks to an approach striving for balance and focuses on fairness in applying the rule of law, something for which the Commission has been heavily criticized, particularly in recent years.

A fair and transparent Wells process, as Chairman Atkins noted, helps the Commission fully understand both the positions of the Staff in making an enforcement recommendation and those of the individual or entity that would be charged. Chairman Atkins’ affirmation of the importance of the Wells process should benefit potential respondents or defendants who receive a Wells notice. The additional time to provide a written submission is a welcome reform. It affords additional time to consider whether a written submission is appropriate under the circumstances, as anything in a Wells submission can later be used by the SEC in its litigation as an admission. The additional time also should afford the parties sufficient time to consider the evidence Chairman Atkins has directed the Staff to provide when it issues the Wells notice. Experienced SEC counsel can help potential respondents or defendants navigate these issues and best present their position and interests to the Enforcement Staff.

The BakerHostetler White Collar, Investigations and Securities Enforcement and Litigation team is composed of dozens of experienced individuals, including attorneys who have served in the Department of Justice and at the SEC. Our attorneys include former unit chiefs as well as partners who have served in the SEC’s Division of Enforcement and Office of the General Counsel, former U.S. attorneys, former assistant U.S. attorneys and attorneys with extensive experience in regulatory investigations, litigation and enterprise compliance counseling. Please feel free to contact any of our experienced professionals if you have questions about this alert.

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<a id="_ftn1" href="#_ftnref1">[1]</a> Paul S. Atkins, SEC Chairman, Keynote Address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law (Oct. 7, 2025), <a href="https://www.sec.gov/newsroom/speeches-statements/atkins-100925-keynote-address-25th-annual-aa-sommer-jr-lecture-corporate-securities-financial-law" target="_blank" rel="noreferrer noopener">https://www.sec.gov/newsroom/speeches-statements/atkins-100925-keynote-address-25th-annual-aa-sommer-jr-lecture-corporate-securities-financial-law</a>.

SEC Defense Process Redefined – Chairman Atkins Announces Changes to Wells Process and Other Enforcement Policies

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