SEC Changes Policy on Admitting Guilt in Settlements of Enforcement Actions


On January 6, 2012, the Securities and Exchange Commission (“SEC”) announced that it has modified its settlement policy for enforcement actions that also involve a criminal conviction or admissions by a defendant of criminal violations. Under its new policy, the traditional “neither admit nor deny” language will be deleted from its settlement documents. Instead, the SEC will recite the facts and nature of the related criminal proceeding. Enforcement staff will have the discretion to incorporate into SEC settlement documents any relevant facts admitted by the defendant in the criminal proceedings.

This new policy applies only to cases where there have been parallel criminal convictions (including guilty pleas), to non-prosecution agreements and to deferred-prosecution agreements between the defendants and the Justice Department that include “admissions or acknowledgements” of criminal wrongdoing. The SEC will continue to use the “neither admit nor deny” language when it settles with a company in the absence of any criminal proceedings.

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