US Stocks: US SEC to give probe targets more notice and introduce other changes

The U.S. Securities and Exchange Commission will give the targets of investigations more time to respond to its notices of potential charges, as part of a broader update to its internal enforcement protocols, the agency said. The updates to the SEC’s enforcement manual, last issued in 2017, are the latest sign of change at Wall Street’s top regulator under Republican leadership. U.S. officials from several agencies have overhauled their approach to policing white-collar crime, from scaling back enforcement against foreign bribery to offering greater incentives for corporate cooperation.The SEC’s process for notifying and communicating investigative targets is one of the most significant changes in the SEC’s new manual. Some defendants and defense attorneys have criticized that process in the past, saying it can vary depending on which office or unit of the agency is handling an investigation.

Now, recipients of such notices, known as Wells Notices, have four weeks to respond to the allegations that SEC officials are considering. Previously, the SEC often gave targets two weeks to respond, which could be extended. Reuters was first to report the policy change.

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

“Our updates to the Enforcement Manual provide greater uniformity, reflect the division’s best practices, and enhance our employees’ ability to perform the mission-critical work they do on behalf of investors,” Margaret Ryan, director of enforcement at the SEC, said in a statement.

Additional time typically benefits the targets of probes because they can improve their arguments in response to the SEC’s allegations.

In other changes, the SEC has outlined a process for considering offering a company under investigation a waiver deemed necessary for certain business activities while they consider a settlement with the agency.