SEC Drops No‑Deny Rule-Companies Can NOW Deny Allegations!

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SEC will no longer silence settling defendants, says Paul Atkins

For decades, the Securities and Exchange Commission (SEC) prohibited those settling enforcement cases from publicly disputing the agency’s claims. The SEC has now reversed this policy, allowing defendants to publicly deny wrongdoing even while reaching a settlement.

Summary

  • The SEC has removed its long-standing rule that barred settling defendants from publicly denying enforcement allegations.
  • SEC Chair Paul Atkins said the policy created unnecessary limits on criticism of the agency during settlement agreements.
  • Commissioner Hester Peirce said allowing both sides to speak freely would improve transparency around SEC enforcement actions.

The U.S. Securities and Exchange Commission announced on Monday that it is removing a rule from 1972. This rule required parties settling with the SEC to agree not to publicly dispute the agency’s claims. The SEC stated the rule gave the impression it was avoiding public scrutiny and differed from the practices of most other federal agencies.

SEC Chair Paul Atkins announced the agency is ending a long-standing policy that prevented companies settling cases from publicly disputing the SEC’s claims. For over 50 years, the SEC required companies to agree not to deny wrongdoing as part of a settlement. Atkins stated he was happy to be removing this restriction, which effectively silenced criticism from those who settled with the Commission.

Previously, when reaching a settlement with the Securities and Exchange Commission (SEC), companies or individuals weren’t allowed to deny wrongdoing, nor could they authorize anyone else to do so on their behalf. The SEC put this rule in place to prevent settlements from suggesting that penalties were being issued for actions that didn’t actually happen.

The SEC also stated it might still require some defendants to admit fault or take responsibility in future settlement agreements. Additionally, the agency announced it will no longer uphold existing agreements that allowed parties to settle without admitting or denying wrongdoing.

Peirce says forced silence hurts transparency

SEC Commissioner Hester Peirce supported the decision, explaining that silencing defendants doesn’t help make the market more open or protect investors.

Commissioner Peirce stated that agreements kept secret by companies involved aren’t beneficial for the markets or for protecting investors, which is the Commission’s main goal.

She explained that clear and open enforcement of financial regulations is essential for healthy markets, and allowing everyone involved in a case to share information helps ensure that openness.

She also stated that the SEC’s investigators should be confident in the quality of their work, and not need to depend on agreements preventing defendants from speaking out after a settlement.

Peirce voiced her concerns about the policy back in early 2024, while the SEC, led by Gary Gensler, was actively cracking down on cryptocurrency companies. She argued then that this approach undermined the fairness and trustworthiness of the regulations.

The Securities and Exchange Commission (SEC) recently told the White House it planned to remove the rule and sent its proposal to do so to the Office of Management and Budget earlier this month.

For several years, cryptocurrency companies have been fighting against the SEC’s regulations, especially as the agency increased its efforts to enforce rules on digital asset businesses. In 2023 alone, the SEC took action against crypto firms in 46 cases and collected $281 million in penalties.

Since President Donald Trump returned to office, the Securities and Exchange Commission (SEC) has resolved or dropped several significant cryptocurrency cases that began under the previous administration. A notable example occurred in May 2025 when the SEC reached a $50 million settlement with Ripple Labs.

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2026-05-19 11:26