On September 26, 2025, Securities and Exchange Commission (SEC) Chairman Paul Atkins announced that the SEC will reinstate its former practice of allowing a party subject to a pending enforcement action to request the SEC to simultaneously consider an offer of settlement and a request for waivers from automatic disqualifications and other collateral consequences resulting from SEC enforcement action. This includes waiver requests relating to the loss of well-known seasoned issuer (WKSI) status, loss of statutory safe harbors for forward-looking statements under the Private Securities Litigation Reform Act of 1995 (PSLRA), and loss of the private offering exemptions provided by Regulations A, D, and Crowdfunding under the Securities Act of 1933, among others. Under this policy, an offer of settlement in an SEC enforcement action that includes a contemporaneous waiver request will be presented to the SEC by the staff for concurrent consideration.
In 2019, then-SEC Chair Jay Clayton implemented a policy that allowed the SEC to consider settlement offers and waiver requests simultaneously. In 2021, this policy was reversed by acting Chair Allison Herren Lee based on a concern that simultaneous consideration of settlement offers with requests to waive disqualifications could result in waivers being used as a bargaining chip in settlement negotiations, and that connecting the two processes could result in “structural conflicts or pressures” within the SEC. This policy of bifurcated discussions remained in place for nearly five years and resulted in some uncertainty for parties considering settlement about the overall consequences of their settlements.
Moving forward, the SEC will again simultaneously consider settlements and waivers in enforcement actions against firms in a manner that Chairman Atkins has stated will streamline allocation of the SEC’s resources and allow for consideration of such proposed settlements and waivers in the full context of the action at hand. Chairman Atkins clarified that the approach will not obligate the SEC to accept any proposed offer and that the SEC will maintain its full rights to accept an offer for settlement but reject the waiver portion of the deal. In such a case, the settling party will have five business days to notify the SEC Staff that it intends to accept the settlement offer without a waiver. If it fails to do so within the required period, the proposed settlement terms may be revoked by the SEC.
It is likely that this policy reversal by the SEC will be met positively by market participants as it provides a settling entity with greater certainty and full information as to the settlement terms and the availability of waiver relief, before agreeing to be bound by a settlement with the SEC. The full text of Chairman Atkins’s statement is available here.
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