As Judicial Scrutiny of the SEC’s Settlement Practices Mounts, the SEC Adopts a Limited Change to Its ‘Neither Admit Nor Deny’ Policy
Last Friday, the Securities and Exchange Commission (“SEC”) reportedly adopted a limited modification to a longstanding settlement policy that has been under increasing fire in recent months. Under the change, as reported by The New York Times and The Wall Street Journal, companies that admit to or are convicted of criminal conduct in parallel cases with the Department of Justice (“DOJ”) will no longer be permitted to simultaneously settle SEC charges without admitting or denying the charges. On the one hand, this reported change does not appear to negatively impact companies because it will merely require them to admit to wrongdoing as a condition of settling SEC allegations in the limited number of instances in which the companies are already admitting to or have been convicted of the same conduct in DOJ proceedings. At the same time, however, this development is noteworthy because it is a sign that, despite the growing criticism, the SEC is -- at least for the time being -- standing behind its policy of allowing companies and individuals in the vast majority of SEC matters to continue settling without having to admit or deny the SEC’s allegations.