The SEC’s practice for decades has been to allow defendants to settle cases without admitting or denying liability. That practice, according to SEC Chairman Mary Jo White, is going to change – at least in some cases. Chairman White, at a conference organized by the Wall Street Journal, said that a new practice of forcing defendants to admit wrongdoing will be applied in “cases where … it’s very important to have that public acknowledgment and accountability.” The SEC will retain its “no admit, no deny” practice for most cases.
Last year, the SEC began forcing defendants who had already admitted wrongdoing in parallel criminal cases to admit liability as a condition of settlement with the SEC.
Defendants are reluctant to admit wrongdoing in SEC settlements because that admission can be used in private litigation. For that reason, the SEC may be forced to take more cases to trial as a result of the new practice.