Defense attorneys welcome what they see as SEC’s shift toward ‘open jacket policy’

Enforcement defense attorneys are sensing what they interpret to be a welcome shift in the Securities and Exchange Commission’s posture toward investigative file access, and that shift involves a three-word phrase: open jacket policy. 

“If the open jacket policy is actually implemented—which we in the defense bar hope is the case—it would be a welcome reform,” Gregory Lawrence, a partner at Womble Bond Dickinson who earlier in his career had served as senior counsel in the SEC’s Division of Enforcement, said in comments earlier this week. 

Lawrence pointed to remarks made during the Practising Law Institute’s The SEC Speaks in 2025 conference in May. It included panel discussions featuring SEC Division of Enforcement staff speakers.  He said enforcement defense attorneys understood comments made by staff during the conference to be reflective of comments made a number of years ago by Paul Atkins. Atkins was sworn in as SEC chairman in April. 

A 2008 article co-authored by Atkins, then an SEC commissioner, called for a new advisory committee to conduct an independent review of the SEC’s enforcement program. An aspect the advisory committee could consider “is the implementation of a written and uniform ‘full-disclosure’ policy for enforcement matters,” the article said. 

“In criminal procedure, this is often referred to as an ‘open jacket’ policy,” the article said. “Operating under such a policy, the enforcement staff would show defense counsel the evidence it has against the prospective defendant, which is the essence of due process.”

During a May 20 SEC Speaks panel, Antonia Apps, a deputy director in the division of enforcement, discussed some changes to what’s known as the Wells Process. 

“So this commission values due process, fairness and transparency, and a robust Wells Process is central to advancing those goals,” Apps said. “Having an open, informed and thoughtful dialogue between the government and defense counsel, produces better outcomes, particularly in complex cases.” 

The Wells Process is essentially an opportunity for the subject of an investigation to argue that no enforcement action against it is warranted.

Apps said that on the government side, “we want to make sure that we’re getting it right, confirming that we’ve not overlooked important evidence or misunderstood the significance of the record we’ve developed or are proceeding on a legal theory outside the confines of our statutory authority, or simply that we should not in the exercise of our prosecutorial discretion proceed with an action.” 

A question that arises often is what information defense counsel should have access to in relation to the Wells Process, Apps said. 

“As head of the New York office, I had always encouraged staff to provide defense counsel not just with the legal theories, but the evidence the staff believed supported those theories,” she said. “Many staff prepared PowerPoint presentations which they walked through with defense counsel, they allowed counsel to come in and review testimony transcripts or key documents in advance of preparing for a Wells meeting and in connection with preparing their Wells submission.” 

Current division leadership is supportive of “a more open and transparent practice such as I have just described,” Apps said.

“The purpose of the Wells meeting and the Wells Process is to make sure that the commission understands the position of the individual or entity against whom enforcement intends to recommend an action,” she said. “We recognize that defense counsel will often need access to the record evidence in order to have that meaningful dialogue about the issues.” 

Apps said that division leadership and the commission benefit from “counsel who are fully informed and can properly advocate for their clients.” However, there are times when there are constraints on what can be provided, she said, citing statutory restrictions relating to whistleblower information and potential concerns in situations where the SEC is working in parallel with criminal authorities as examples. 

“But in general we will try to give access to the record so that defense counsel can have a meaningful dialogue with division leadership in the Wells Process,” Apps said. 

R. Daniel O’Connor, a partner at Ropes & Gray, said the SEC’s Enforcement Manual provides that following a Wells notice, staff at their discretion may permit access to non-privileged parts of the investigative file. 

 “This is the ‘open jacket’ process, although I have not always heard it referred to by this term,” said O’Connor, a former trial attorney in the SEC’s enforcement division.

 Such access isn’t a right and has always been subject to limits, he said. 

“In practice, when provided access in the past it has usually been narrow, typically you get to see investigative transcripts and exhibits, and in rare circumstances notes from non-formal witness interviews,” the attorney said. “This was the practice when I was at the commission years ago.” 

However, under former SEC Chair Gary Gensler, “in most instances you were told no access or given quick and even more limited access,” O’Connor said. 

“By contrast, under the Atkins administration, the SEC enforcement staff does appear to be reverting to earlier practice, with staff providing investigative file access in more instances,” he said. 

Having access to such information “means we get a fuller picture of the evidence that the SEC staff is relying upon in making its Wells determination so that we can appropriately address any concerns and questions full on,” O’Connor said, adding that often what happens in such cases is there is agreement about the facts but disagreement about their significance.

The SEC’s return to a presumption that investigative file access should be granted during the Wells Process is “a significant development” that “provides for a better discourse,” he said. 

“You must not really believe in your case if you’re at the SEC and don’t want people to get access,” O’Connor said.