On Jan. 6, 2012, the U.S. Securities and Exchange Commission announced that it was changing its longstanding policy of allowing defendants to settle civil enforcement actions without admitting or denying the SEC’s allegations. Now, where there is a parallel criminal case, the SEC will no longer allow the traditional “neither admit nor deny” language in its federal court consent judgments or its settled administrative orders. Given the frequency of parallel SEC and criminal proceedings, practitioners should pay careful attention to how this abrupt shift in a decades-old practice might affect their clients.1 This article discusses the implementation of this policy change through its fledgling months and considers the ramifications for individuals and corporations.
Changing the Policy After 40 Years
The SEC’s policy change came on the heels of a much-ballyhooed critique by Judge Jed S. Rakoff and a subsequent promise by Congress to take a hard look at the SEC’s “neither admit nor deny” policy.
