Investigations and enforcement trends: Top takeaways for Q1 2026

We recently gathered a group of regulatory attorneys from across Reed Smith to provide a rundown of the key trends to watch for in Q1 2026. If you missed the webinar, you can access the recording on demand.

Please see a short summary of our top takeaways below and watch for an invitation to the next installment of this quarterly webinar series. We hope you can join us!

Unpacking the SEC's updated Enforcement Manual

1. The 2026 Manual expressly states that it “will be updated and posted on an annual basis,” replacing the prior approach of “periodic” revisions (with the last one being done in 2017).
2. Common Wells process practices, such as time extensions and attendance by a higher-level director, are memorialized in writing and standardized across the Commission.
3. In general, changes to the Enforcement Manual mirror recent SEC statements that emphasize a new era of cooperation with market participants.

U.S. – UK AML enforcement update

1. A series of DOJ enforcement actions in 2026 makes clear that banks – as gatekeepers – are under scrutiny, with major risk areas being account opening procedures and controls around the issuance of debit cards. 
2. The UK FCA has recently issued multi-million pound financial penalties on several well-known banks for defective AML systems and control issues including governance gaps, weak risk assessments, and compliance infrastructure that failed to scale with business growth.  
3. A 2025 UK Consultation proposes consolidating AML/CTF supervision of legal and accountancy sectors under the FCA, which would apply uniform standards, enhanced enforcement powers, and a public register - requiring professional services firms to prepare now for stricter AML oversight.

Expanding regulatory powers in Europe: recent case law developments and business implications

1. Investigations are conducted on a larger scale and with wider powers. The Court of Justice of the European Union confirms the European Commission’s (the Commission) broad authority to access data in the context of its investigations, including data stored on foreign servers. Wider powers of the Commission will be enacted through the review of Regulation 1/2003.
2. Legal privilege is fragmented. The Commission maintains a restrictive interpretation of legal professional privilege (LPP) and will not consider in-house counsels’ review as protected, even though France just recognized LPP for in-house counsels, under strict conditions.
3. Prepare, train, and anticipate. Investigations are increasingly intrusive, targeting offices, homes, phones and messaging apps. Companies must establish clear procedures, train exposed teams, and understand their digital footprint.

Government investigations of gender-affirming care: key takeaways for all companies

1. At both the state and federal level, government enforcement agencies are utilizing aggressive and, in some cases, unprecedented tactics to curb access to gender- affirming care for minors across the nation, including in states where it remains legal.
2. The government's playbook here may soon be deployed in other areas, such as other politically disfavored health care (e.g., vaccines, reproductive health care).
3. When the government subpoenas medical records and other sensitive patient information, defenses must be tailored to the specific legal and statutory basis upon which the government purports to demand such information; even if you cannot limit the scope of the subpoena, other strategies are available to protect patients and the organization from direct and/or ancillary legal exposure. 

DOJ’s record-breaking False Claims Act recoveries for FY 2025

1. The DOJ recovered $6.8 billion in FY 2025, which was the highest in FCA history. There was also a record of 1,297 qui tam filings, and health care fraud accounted for 83% of recoveries.
2. The DOJ is targeting Medicare Advantage fraud, prescription drug pricing, medical device quality, trade and tariff evasion, and cybersecurity compliance, with growing interagency coordination.
3. The DOJ rewards self-disclosure and cooperation while aggressively dismissing meritless qui tams. The reestablished DOJ-HHS FCA Working Group signals sustained enforcement momentum.

What is really happening with the FCPA, and what should companies do?

1. Foreign Corrupt Practices Act (FCPA) enforcement may have pivoted, but the DOJ is still generating leads and investigating misconduct. In addition, in late 2025, the DOJ indicted one company and entered into a deferred prosecution agreement with another.
2. Given the DOJ’s FCPA priorities, companies should focus on higher corruption and bribery risks – not de minimis courtesies or low-value, “customary business practices.” It is important to understand your company’s government interactions worldwide and assess any related risks.
3. The DOJ believes its Whistleblower Awards Pilot Program works. It is important for companies to detect and improve any weaknesses in their own whistleblower programs so that companies can efficiently investigate complaints/hints prior to any government involvement.

Antitrust Division first-ever whistleblower payment and fugitive initiative: key takeaways

1. The new antitrust whistleblower program increases the DOJ’s enforcement toolkit.
2. Companies must plan accordingly with robust internal systems.
3. The new DOJ antitrust fugitive initiative may offer a creative avenue to resolve pending international cases.