1. Start with the Disclosure Record
An SEC inquiry starts with what was said and to whom. Rebuild the statement, the speaker's role, the recipients, and the facts known then. Those details help determine whether Regulation FD applies before broader theories shape the response.
Reconstruct the Statement
- Preserve emails, messages, notes, scripts, recordings, calendars, and IR records.
- Identify the speaker, recipients, timing, and any public note that followed.
- Compare the communication with information already available to the market.
Keep Legal Theories Separate
- Regulation FD addresses specified selective disclosures of material nonpublic information.
- A violation arising solely under Regulation FD does not itself create Rule 10b-5 liability.
- Use an Evidence Preservation review to protect records needed for review.
2. Test Regulation FD Elements before Responding
Regulation FD does not cover every private company communication. Test whether the issuer is covered, who spoke, what was shared, who received it, and whether public disclosure followed. Recipient status can matter as much as content.
Check the Core Elements
| Issue | Defense Question |
|---|---|
| Issuer | Is the company subject to Regulation FD? |
| Information | Was it material and nonpublic? |
| Speaker | Was the person acting for the issuer? |
| Recipient | Was the recipient within a covered category? |
| Public release | Was compliant public disclosure made? |
Issuer
- Defense QuestionIs the company subject to Regulation FD?
Information
- Defense QuestionWas it material and nonpublic?
Speaker
- Defense QuestionWas the person acting for the issuer?
Recipient
- Defense QuestionWas the recipient within a covered category?
Public release
- Defense QuestionWas compliant public disclosure made?
Check Exceptions and Timing
- Review whether the recipient owed a duty of trust or confidence to the issuer.
- Check for an express agreement that requires the recipient to keep the information confidential.
- Distinguish intentional disclosure, which requires simultaneous release, from non-intentional disclosure, which requires prompt release.
3. Control the Record before Wells
An inquiry can grow once staff seeks records or testimony. In a formal investigation, SEC staff can use subpoenas to compel testimony and documents. Preservation, privilege, and consistent facts matter before a Wells notice arrives.
Manage Production with Context
- Map custodians, devices, accounts, and data sources before expanding collection.
- Use review methods that protect privilege and keep production accurate and traceable.
- Track what was produced, withheld, corrected, or supplemented and why.
Prepare for a Wells Notice
- A Wells notice reflects a preliminary staff decision to recommend an enforcement action or proceeding.
- The 2026 Enforcement Manual ordinarily provides four weeks for a Wells submission absent timing constraints.
- A Securities Enforcement review can focus the response on claims, evidence, and defenses.
4. Multi-Agency Oversight and Separate SEC and Criminal Riskoperations
The SEC may pursue a civil case or agency proceeding, while criminal authorities use a separate process. A grand jury subpoena or contact from criminal investigators changes the defense analysis. When both tracks concern the same disclosure, company and officer interests need separate review.
Identify the Active Process
- Confirm whether the matter involves an SEC request, subpoena, Wells notice, or filed case.
- Treat a grand jury subpoena as part of a criminal process, not an SEC demand.
- Use an SEC Investigations review when regulatory and criminal inquiries may overlap.
Check Company and Officer Interests
- Identify who prepared, delivered, reviewed, approved, or corrected the disputed communication.
- Assess whether the company's factual or legal position may differ from an officer's defense.
- Preserve evidence without treating cooperation or privilege waiver as an automatic response.
5. Compare Resolution with Litigation
A defense decision should follow the evidence, not an assumed penalty range or local cost estimate. Compare the SEC's theory, proof, possible remedies, collateral effects, and cost of more litigation. Settlement can affect an issuer and an officer differently.
Evaluate Resolution Terms
- Separate issuer exposure from remedies that may apply to individual officers.
- Review penalties, disgorgement, undertakings, and other limits where legally available.
- Consider collateral consequences before assessing the practical value of settlement.
Keep Enforcement Forums Distinct
- The Commission may authorize a federal court action or an administrative proceeding.
- An agency proceeding may involve an ALJ decision and later Commission review.
- Do not assume federal court and agency proceedings follow the same path.
6. Control Defense Costs through Scope
Defense cost often follows scope, data volume, custodians, expert needs, parallel proceedings, and litigation posture. Local billing averages do not answer that question. A useful budget ties staffing and review methods to the work the record requires.
Control Document Review
- Define defensible custodians, systems, dates, and issues before expanding collection.
- Consider technology-assisted review when the data set and review protocol support it.
- Use accounting, economic, or technical experts when a disputed issue requires them.
Budget by Decision Point
- Separate investigation, Wells response, settlement, litigation, and possible appeal workstreams.
- Reassess staffing when the agency's theory, evidence, or requested relief is clearer.
- Use a Securities & Finance review for related disclosure and capital-markets issues.
7. Frequently Asked Questions
Does Regulation FD apply to every private conversation with an investor?
No. Coverage depends on the issuer, speaker, information, recipient, and circumstances. Some confidential communications and recipients fall outside the rule, so test the actual exchange first.
Can an accidental selective disclosure be corrected?
Regulation FD requires prompt public disclosure after a covered non-intentional disclosure. Timing depends on when a senior official learns of it and meets the rule's knowledge standard.
Does receiving a Wells notice mean the SEC has already filed a case?
No. A Wells notice states a preliminary staff decision to recommend an enforcement action or proceeding. The Commission decides whether to authorize the case.
Does Regulation FD create a private lawsuit for investors?
No. Regulation FD does not create a private right of action. Other federal securities-law theories may raise separate issues, so broader exposure can remain.
8. Build the Defense Around the Record
SEC disclosure defense should connect the communication record, Regulation FD elements, investigation posture, and any parallel risk. SJKP's attorneys can assess those issues, organize the response, tie each step to facts as facts may shift over time, and identify key decisions before the enforcement record takes shape.
24 Aug, 2026
