US Stocks: US SEC to give probe targets more notice, rolls out other changes

The U.S. Securities and Exchange Commission ​will give targets of investigations ​more time to respond to its notices of potential ​charges as part of a broader update of its internal enforcement protocols, the agency said. The updates to the SEC's enforcement manual, which was last issued in 2017, are ‌the latest ⁠sign ⁠of change at Wall Street's top regulator under Republican leadership. U.S. officials across agencies have ​overhauled their approach to policing white-collar crime, from scaling back enforcement against foreign bribery ​to offering bigger incentives for companies' cooperation.

The SEC's process for notifying and communicating with targets of investigations is among the key changes to ​the SEC's new manual. Some defendants and defense ⁠lawyers have ‌criticized that process in the past, saying it can ​vary based ​on which office or unit of the agency is ⁠handling an investigation.

Now, recipients of such communications, known ​as Wells notices, will have four weeks to respond ​to the allegations SEC officials are weighing. Previously, the SEC has often given targets two weeks to respond, which can be extended. Reuters was the first to report the policy change.


Recipients will also be entitled to a meeting with the SEC within four weeks of submitting ‌their response, according to the new manual.

"Our updates to the Enforcement Manual ensure greater uniformity, reflect the Division's best ​practices, and ​improve our staff's ability ⁠to carry out the mission-critical work they do on behalf of investors," said SEC enforcement director Margaret Ryan in a statement.

Extra time typically benefits targets ​of probes as they can improve their arguments in response to the SEC's allegations.

In other changes, the SEC laid out a process for considering offering a firm under investigation a waiver considered necessary for certain business operations while they are weighing a settlement with the agency.