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Matthias Knab, Opalesque for New Managers: The U.S. Securities and Exchange Commission on May 18, 2026 rescinded a policy that for more than half a century had conditioned every SEC settlement on a defendant's promise not to publicly deny the agency's allegations. The change, formally a rescission of Rule 202.5(e) of the Commission's informal rules of procedure, brings the SEC into line with nearly every other federal enforcement agency and ends one of the most distinctive - and most criticised - features of the Commission's settlement practice.
Under the previous regime, a person or firm settling an SEC enforcement action had to accept a gag on public denials as a precondition for resolving the matter. They could neither contradict the agency's complaint themselves nor permit anyone associated with them to do so. The rescission removes that condition prospectively and, importantly, also disarms existing settlements: the Commission stated that it will not enforce existing no-deny provisions already entered, and will not ask any court to vacate a settlement or reopen a proceeding if a defendant breaches such a clause in the future.
Atkins: a free-speech rationale
SEC Chairman Paul S. Atkins framed the move primarily as a free-speech correction. "Speech critical of the government is an important part of the American tradition," Atkins said, addin...................... To view our full article Click here
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