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On October 7, 2025, nearing the six-month mark of his tenure as Chairman at the U.S. Securities and Exchange Commission ("SEC"), Paul S. Atkins delivered a keynote address spotlighting the SEC's primary due process mechanism, the Wells Process, and outlining specific procedural aspects of the process he expects the SEC's Division of Enforcement to follow. Additionally, he reiterated the Commission's return to simultaneous consideration of enforcement settlements together with parties' requests to waive the serious collateral consequences—separate and apart from settlement terms—often resulting from SEC actions.
The Wells Process – A Necessary Extension of Due Process Rights
The Wells Process, which is addressed in Rule 5(C) of the SEC's Rules on Informal and Other Procedures and in the publicly-available Enforcement Manual, typically occurs at the end of an SEC investigation, and is the process by which potential respondents and defendants in SEC enforcement investigations formally learn of the charges they may face in a litigated action. The process further provides them with the opportunity to advocate for a different enforcement action or for the SEC to decline to proceed with the matter altogether. Under the procedures outlined in the Rule and Manual, SEC staff have the discretion to share with potential respondents and defendants "the general nature of the investigation, including the indicated violations as they pertain to them, and the amount of time that may be available for preparing and submitting a statement" prior to staff's recommendation to the Commission on further proceeding.1 Importantly, staffers also have discretion to provide a potential respondent or defendant with the opportunity to review portions of the staff's investigative file.2 An individual or entity involved in the Wells process may also request meetings with staff to discuss the substance of the proposed action.3 Given the discretion afforded staff, the specifics of the Wells Process (e.g., timing of a response and access to the investigative file) could vary greatly depending on the individual SEC staffers involved in the matter.
In his speech, Chairman Atkins reemphasized the importance of the Wells Process, framing it as "an extension of due process and fundamental constitutional rights." The Wells Process, he remarked, "is not an impediment to effective enforcement, but rather, a precondition for it." The Chairman explained that the process serves both the interests of the public in the fair and transparent enforcement of federal securities laws, and the interests of the Commission in conducting efficient investigations that culminate in accurate enforcement determinations. He said:
The Commission benefits from a robust Wells process that supplies us with the full context of the relevant facts, problems with legal theories or the use of legal authorities, potential defenses, and policy or programmatic reasons not to pursue an enforcement action. An open, informed, and thoughtful dialogue between the Division and potential respondents or defendants produces both better recommendations to the Commission and better outcomes, particularly in complex matters.
Chairman Atkins made clear his view that a robust Wells Process ensures the appropriate use of the Commission's resources and reduces the risk of misguided focus. He urged that staff should "go after cases of genuine harm and bad acts," but "view cases of benign or innocent actions differently." It is hard to say where certain facts would fall on this spectrum, but the Chairman specifically criticized examples of enforcement action "in areas, such as retention of books and records, that consumed excessive Commission resources not commensurate with any measure of investor harm."
More broadly, Chairman Atkins described the Wells Process as critical in curbing potential overreach by a government agency that "could become policeman, prosecutor, judge, jury, and executioner all in one" and pointed to the Supreme Court's recent attention to due process rights in SEC matters in Lucia v. SEC and Jarkesy v. SEC to underscore this concern. In raising the issue during this address, he spoke of the need to consider "how we can improve on and refine our enforcement processes while preserving their original purpose."
Reestablishing the Basic Principles of SEC Enforcement Procedure
In his remarks, Chairman Atkins made abundantly clear his favored approach to enforcement investigations that put certain foundational procedural principles at a high premium. With these goals and principles in mind, the Chairman advised staff, and potential respondents and defendants alike, what they should expect of the Wells Process going forward:
- Review of Wells Submissions by the Commissioners:Every Wells submission in settled and contested cases will be provided to, and should be reviewed directly by, the SEC Commissioners. The Chairman admonished preceding practice in which Wells submissions were not given to Commissioners if the charges or grounds for the Wells notice had changed.
- Meetings with Senior Leadership:Chairman
Atkins has directed senior enforcement leadership (presumably the
Director of Enforcement or her designate) to meet with defense
counsel before making a recommendation to the Commission. While
such meetings with senior leadership have long occurred and did in
the last administration, prior Division leadership was less
inclined to make senior leadership available.
Although Chairman Atkins has indicated senior enforcement leadership should participate in meetings with defense counsel, potential respondents and defendants should not expect multiple meetings of this type—a position consistent with prior administrations. - Timelines: Staff should generally provide potential respondents and defendants with at least four weeks to make responsive Wells submissions. No such minimum existed previously; the timing was left at staff's discretion. Overall, Chairman Atkins encouraged staff to be "realistic" about timing, and to consider the length and complexity of cases when determining any deadlines for submission. Likewise, he admonished potential respondents and defendants to be reasonable with timing requests, and understand that staff is seeking to meet their own deadlines and reach conclusions in reasonable time periods.
- Early Engagement: Chairman Atkins suggested staff consider engaging substantively with proposed respondents and defendants earlier in investigations, well in advance of the Wells Process, in circumstances where, for example, resolution of fact issues early on could avoid protracted investigation and expenditure by both sides. For example, he encouraged the use of "white papers" to address such legal or factual concerns ahead of a costly Wells Process, especially where the potential respondent or defendant feels obligated to make a public disclosure about receipt of a Wells notice. Such a "white paper" would similarly be submitted to the Commission for their review and consideration.
- Transparency in Proceedings: Chairman Atkins made clear his expectation that enforcement staff must engage productively—and in "good faith"—in the exchange of information allowed by the Wells Process, and "provide sufficient information for potential respondents or defendants to understand the potential charges and the evidentiary basis for those charges, such as testimony transcripts and key documents." The Chairman also emphasized the need for the Commission's enforcement orders in settled actions (i.e., public documents announcing SEC enforcement actions) to thoroughly explain the nature of the violation and the reasons for the relief imposed, and, in turn, for closing letters to parties involved in investigations to clarify that an investigation has concluded. Finally, the Chairman added that the Commission must clearly explain the procedures by which individuals who are subject to industry and penny stock bars can seek reinstatement and the standards under which their applications will be considered. What will remain the same, however, is that staff may decline to provide a Wells notice "in rare instances" where it is not practicable, such as cases requiring emergency action and relief. All staff recommendations to the Commission will state whether the opportunity was provided for a Wells submission or explain why not.
Simultaneous Consideration of Settlement and Waivers from Collateral Consequences
Continuing on the theme of fairness and transparency, the Chairman also reemphasized his recent statement announcing the Commission's return to simultaneous consideration of settlement offers and related waiver requests.
Under the preceding administration's policy, the Commission would not consider a settlement offer by a party subject to an existing or potential SEC enforcement action that was conditioned on receiving a collateral consequences waiver (e.g., a waiver of loss of Well-Known Seasoned Issuer or "WKSI" status for certain public companies). The settlement offer and waiver request needed to be pursued in separate tracks by separate divisions—the Enforcement Division and the relevant Policy Division, respectively. Chairman Atkins described this as a "fragmented process" that created "uncertainty for settling parties and inefficiency for the Commission and its staff."
As a result, the Chairman has announced a return to the policy of prior administrations in which staff from the Enforcement Division and Policy Divisions must present to the Commission offers of settlement in an enforcement action in tandem with any waiver requests. According to the Chairman, this simultaneous consideration enables the Commission to better assess whether the proposed resolution as a whole—"within the context of the relevant facts, conduct, and consequences, and with the benefit of the analysis and advice of" the relevant divisions—achieves the Commission's mission.
This does not mean, however, that the Commission now would be bound to accept a settlement offer. To the contrary, the Chairman expressed his hope that the settling entity will be in a better position to assess its options should the Commission accept a settlement offer, but decline a waiver request. At that point, the Chairman explained that a dialogue between staff and a potential respondent or defendant should continue, either to re-evaluate settlement terms or move forward to a litigated enforcement action against the SEC.
Avoiding the "Wrong Incentives" for Enforcement Staff
Finally, in his closing remarks, Chairman Atkins took the opportunity to discuss the importance of an appropriate incentive framework within the Enforcement Division. "If we reward the staff only for bringing enforcement actions," he warned, "then we have discouraged the staff from determining not to recommend an enforcement action. A basic tenet of management is, 'You get what you measure.'" The Chairman advised that staff will be rewarded for "their quality work and judgement on cases to bring, violations to charge, and relief to seek" rather than be uniformly incentivized to "stretch the boundaries of existing law" for the purpose of bringing enforcement actions.
Conclusion
Even if not a sea change in the manner in which the Enforcement process plays out, the Chairman's remarks signal a recommitment to certain procedural safeguards available in SEC investigations. While SEC staff will continue to have important discretion to adapt to the facts and circumstances of any particular matter, the Chairman's message should be heard loud and clear both inside the Agency and in the defense bar. Process matters, particularly when the stakes of an SEC investigation can be so high to an entity and the individuals associated with them.
Footnotes
1 17 C.F.R. § 202.5(c).
2 Securities and Exchange Commission, Division of Enforcement, Office of Chief Counsel, Enforcement Manual (November 28, 2017), at 22.
3 Id.
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