Respondents in enforcement proceedings brought by the U.S. Securities and Exchange Commission (SEC) will now be able to settle cases without agreeing that they will not publicly deny the regulator’s allegations after settling.
The SEC has rescinded its policy of requiring enforcement settlements to include an agreement by respondents that they will not continue to deny the allegations against them — a provision that has been a standard feature of regulatory settlements for decades.
The regulator said that the policy change will give it more flexibility to settle enforcement actions, recognizes that “the effect on the public interest from such denials may be minimal,” and that the policy may have created the impression that the SEC is trying to shield itself from criticism.
It also noted that there’s never been an instance when the SEC reopened a case because a respondent violated the “no deny” promise.
As a result of the change, the regulator also said that it will not enforce these provisions in existing settlements.
“Speech critical of the government is an important part of the American tradition. This [rescission] ends the policy prohibiting such criticism by settling defendants,” said SEC chairman, Paul Atkins, in a release.