When Judge Rakoff rejected a proposed settlement between Citigroup and the Securities and Exchange Commission in late 2011, because it lacked an admission of wrongdoing, he explained that “the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.”1 Whether in direct response to Rakoff’s criticisms or not, the SEC has begun to move away from these “contrivances,” by announcing a new policy pursuant to which, in certain cases, defendants will be required to admit wrongdoing in order to settle potential SEC civil actions.
The SEC’s announcement suggests that it will seek admissions of misconduct in egregious cases even where doing so may affect the settlement process. Since announcing the new policy in July, the SEC has already obtained multiple admissions of wrongdoing. This move away from the “neither admit nor deny” standard that previously prevailed will have real consequences, and some predict that the policy may harm both the SEC and the companies it regulates.2 Putting aside whether the policy change is good or bad, this article discusses the implementation of the new settlement policy, and will offer a preliminary assessment of the potential impact on internal investigations and cooperation with the SEC that can be gleaned from the first settlements under the policy.
Recent Admissions
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
