On February 11, 2026, the relatively newly appointed SEC’s Enforcement Division’s Director, Margaret Ryan (Director Ryan), spoke at the Los Angeles County Bar Association. In her address, Ryan touched upon three critical topics: (1) the guiding principles of the Commission’s Enforcement Division, (2) the importance of the Wells Process, and (3) the Commission’s enforcement priorities under Chairman Paul Atkins.
Director Ryan’s remarks are critically important to closely scrutinize as she is new to the Commission and its practices and does not have a legal background steeped in securities law from which to predict her likely future positions on key enforcement matters. However, Director Ryan did serve as a judge in the military and thus has a deep background in weighing competing positions, interpreting and applying the law and seeking just results consistent with precedent – all important attributes for an individual in her current, powerful position.
In this analysis, I will highlight those of Director Ryan’s remarks that I believe are most salient as to what the investing public, the financial markets and the SEC defense bar can expect from the Enforcement Division going forward.
What Does the New SEC Enforcement Director View as the SEC’s Guiding Principles?
Director Ryan first made clear that in her capacity as enforcement head, she would guide with “integrity, honor, fidelity and an unwavering commitment to the fair and judicious use of the formidable power and resources” provided to her. She made clear that these core principles were wholly consistent with Chairman Atkin’s public vow to respect and uphold the rule of law and provide a fair process to all capital markets members. Director Ryan also acknowledged criticism that has been leveled at the enforcement division for its past actions, but made clear that she would not let that deter her from pursuing the Commission’s stated goals of investor protection, ensuring fair, orderly and efficient markets, while also facilitating the raise of capital.
What Did the New SEC Enforcement Director Say About The Wells Process?
Director Ryan stressed that she, along with Chairman Atkins, are intent upon providing a “transparent and appropriate” process to those under investigation by the SEC, whether individuals or entities. She explained that one way of doing so is by respecting the integrity of the Wells process.
What is the SEC Wells Process?
The Wells process consists first of a Wells Notification, which is a formal written notification from the SEC Enforcement Staff that it intends to recommend charges. It is typically provided by the SEC staff at or near the end of the investigation and lays out the proposed legal charges and their underlying factual basis. The proposed target is then able to submit what is called a Wells Submission, which explains why the SEC is wrong and thus the investigation should be dropped, or why perhaps only lesser charges should be pursued and settled. As a practical matter, many investigations are resolved at this stage through negotiations and filed as settled litigated cases. Those that are not settled, typically get filed and litigated in Federal Court or in SEC Administrative Proceedings.
What Are the New SEC Enforcement Director’s Views on the Wells Process?
Director Ryan made clear that she sees the Wells Process as a “meaningful opportunity” for a target of a Wells Notification to address key issues, both on the facts and the law, prior to any enforcement decision being made, and that the opportunity to meet with leadership of the Enforcement Division to pitch the case for no-action is also particularly important to the effectiveness and integrity of the process. Director Ryan, citing to her prior work as a judge, acknowledged the value of an adversarial system in which the Enforcement Division can obtain the benefit of “zealous advocacy” from defense counsel regarding the merits of a potential case so that the Enforcement staff is in the best, educated position to “get it right” before a final prosecutorial decision is made and the real-life, significant consequences flow from such a decision.
As a side note, Chairman Atkins just recently extended the time frame in which to respond to a Wells Notification from two (2) to four (4) weeks, which as SEC defense counsel I believe is a significant and necessary improvement to the Wells Process to ensure sufficient time to adequately prepare and persuasively present arguments as to why charges should not be recommended.
What Are the New Director’s Views on Enforcement Priorities?
Director Ryan set forth three main points on enforcement priorities.
First, she made clear that the Enforcement Division has remained keenly focused on zealously enforcing the federal securities laws with fairness and an emphasis on the timely resolution of matters, consistent with the corresponding need to maintain fair, orderly and efficient markets and facilitate the formation of capital. Director Ryan made clear, however, that any suggestions that SEC enforcement has been “tossed to the wayside” or has otherwise been downplayed under the current administration are not only hyped but “flat out wrong.”
Second, Director Ryan reinforced the notion that the Enforcement Division is now predominantly focused on detecting, investigating and prosecuting securities fraud to protect the investing public, and in particular, retail investors from the “liars, cheats and thieves” who can cause devastation of family retirement savings or educational funds. Specifically, she identified cases such as insider trading, market manipulation, and accounting fraud that undercut financial market integrity. Finally, Director Ryan stated that the SEC will use its remedial powers in an attempt to return funds to defrauded, harmed investors.
Third, Director Ryan made a marked distinction between fraud and compliance violations — such as a broker-dealer’s books and records obligations, or a public company’s reporting responsibilities. While she made clear that the latter violations are important, she suggested that many of those types of violations should not, and would not necessarily, result in enforcement action. Director Ryan did, however, carve out such situations where compliance violations, absent fraudulent conduct, may still be subject to enforcement if they pose risks to investors, market integrity or benefit the violator. But, even in those scenarios, she suggested that enforcement action may entail more of a “thoughtful resolution” that recognizes violative conduct but also seeks to remedy the underlying bad conduct.
What Are The Conclusions To Be Drawn From Director Ryan’s Comments on the New SEC Enforcement Division’s Approach?
Here are my takeaways from an SEC defense perspective.
First, the SEC Enforcement Division will continue to work zealously, albeit with less resources, with an emphasis on bringing hard-core fraud cases (insider trading and accounting fraud), with less of an emphasis on “technical” corporate disclosure issues and books and records violations. Whether this more lenient approach also applies to registration violations, remains to be seen.
Second, the Wells Process will not only be respected, but perhaps also reinvigorated such that the opportunity to persuade the Enforcement Staff to drop meritless investigations may become more likely assuming facts justifying such a result.
