In a move that appears at once to be shrewd, savvy and largely symbolic, the SEC has modified its longstanding policy that it will not require a defendant to admit or deny liability, or facts that might establish its liability, in a settlement with the SEC. Now, such an admission may be required "when appropriate."1 Whatever the outcome in the SEC's mandamus appeal of Judge Jed S. Rakoff's Citigroup decision,2 Rakoff has effectively won the war, even if he loses the Citigroup battle. Although denying that Rakoff influenced them, the SEC conceded (effectively, if not formally) that its policy was simply too weak and equivocal.
Of course, personnel in the SEC Division of Enforcement may still think such an admission is seldom "appropriate." Indeed, overworked, understaffed, and experienced more at settling cases than taking them to trial, the "Division of Settlement" (as defense practitioners dub it) has every reason to go slow in implementing this change in policy. But, eventually, they will have to obtain some admissions in at least a few cases to make good on SEC Chairwoman Mary Jo White's promise.
