Some recommended reading for anyone who might have occasion to chat with the staff of the Securities and Exchange Commission’s Enforcement Division: The commission has published for the first time a 129-page enforcement manual that sets out the staff’s expectations when it requests information.

SEC spokesman John Nester says the manual was published based on the SEC’s acceptance of a recommendation to do so in an August 2007 report of the minority staff of the Senate Finance and Judiciary Committees.

That report, “The Firing of an SEC Attorney and the Investigation of Pequot Capital Management,” details the findings of a joint investigation by the staff of the Senate Committees on Finance and Judiciary into “allegations of lax enforcement, improper political influence, whistleblower retaliation, and related matters involving the SEC.”

A recommendation, found in the executive summary on page 7, directs the SEC to “draft and maintain a uniform, comprehensive manual of procedures for conducting enforcement investigations, along the lines of the United States Attorney’s Manual.”

Sturc“The decision to publicly release the manual is a first and, in my view, it is significant,” says John Sturc, a former SEC attorney and partner with Gibson Dunn & Crutcher.

While the manual’s provisions do not create enforceable rights, Sturc says the manual does set out to the public the staff’s expectations about how it will exercise its discretion and the staff’s expectations regarding how people should respond to subpoenas and other requests for information.

“It also sets out the SEC’s position on a variety of other recurring issues—disclosure of information in connection with ‘Wells’ calls, standards for opening and closing investigations; when the staff can or will contact corporate employees without contacting corporate counsel; witness ‘assurance’ letters, and many other topics,” says Sturc.

Previously, he notes, staff enforcement policies were set and interpreted internally and answers frequently varied between regional offices and within the headquarters office. “Now, the bar and the public can see what to expect and can point to written policies to better assure uniform and fair treatment,” he says.

Among other things, the manual publishes standards for opening an inquiry or investigation, mandates a regular review of open investigations, and gives the staff the discretion, upon request, to allow the recipient of Wells notices to review “non-privileged portions of the investigative file, including documents that the recipient likely would receive during discovery if the Commission were to file a recommended action or proceeding,” which should enable counsel to better advise clients of the risks of possible enforcement action, facilitates the preparation of more focused and helpful Wells submissions, and may also encourage better and quicker resolutions of enforcement actions, according to a GDC alert.