SEC Rescinds Longstanding “No-Deny” Settlement Policy
The Securities and Exchange Commission said it has rescinded a decades‑old policy that barred settling defendants from publicly denying the allegations in enforcement actions where sanctions were imposed.
The policy, codified in Rule 202.5(e), required defendants and respondents who settled with the SEC to agree not to publicly deny the agency’s allegations in complaints or administrative orders. By rescinding the rule, the SEC said it is aligning itself with the “overwhelming majority” of federal agencies that do not impose similar restrictions, while giving the Commission more flexibility to resolve cases and potentially speed the return of money to harmed investors.
The SEC said the change reflects a recognition that public denials following settlements may have minimal impact on the public interest and that the prior policy may have created “an incorrect impression that the Commission is trying to shield itself from criticism.”
“For more than 50 years, the Commission has conditioned settlement on a defendant’s promise not to publicly deny the Commission’s allegations. I am pleased that we are rescinding the no‑deny policy today,” SEC Chairman Paul S. Atkins said. “Speech critical of the government is an important part of the American tradition. This rescission ends the policy prohibiting such criticism by settling defendants.”
In light of the change, the SEC said it will not enforce existing no‑deny provisions already embedded in prior settlements. If a defendant breaches such a provision, the agency will not ask a court to vacate the settlement or reopen an adjudicatory proceeding on that basis.
The Commission generally does not require settling defendants to admit to the allegations, and the rescission does not alter its approach to admissions. The SEC said it retains full discretion to settle cases without admissions or to negotiate for admissions where appropriate.
