The U.S. Securities and Exchange Commission has rescinded its decades-old policy that barred defendants in enforcement settlements from publicly denying the agency’s allegations.
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.
In a statement released Monday, the U.S. Securities and Exchange Commission said the repeal removes a rule first adopted in 1972 that required settling parties to agree not to challenge the agency’s claims in public. Regulators said the policy had created the impression that the SEC was attempting to insulate itself from criticism, while also placing the agency out of step with most other federal regulators.
“For more than 50 years, the Commission has conditioned settlement on a defendant’s promise not to publicly deny the Commission’s allegations. I am pleased that we are rescinding the no-deny policy today,” SEC Chair Paul Atkins said. “This rescission ends the policy prohibiting such criticism by settling defendants.”
Under the old framework, companies or individuals settling with the SEC could neither deny the allegations nor allow others to issue denials on their behalf. According to the rule’s original text, the agency adopted the policy because it did not want settlements to create the impression that sanctions were being imposed over conduct that never occurred.
At the same time, the SEC clarified that it may still require certain defendants to admit wrongdoing or liability as part of future settlements. Existing no-deny provisions also will no longer be enforced, according to the agency.
Peirce says forced silence hurts transparency
Backing the decision, SEC Commissioner Hester Peirce argued that preventing defendants from speaking publicly did little to support market transparency or investor protection.
“Settlements shrouded in forced silence by the non-governmental party do not serve either the markets or the Commission’s investor-protection mission,” Peirce said in a separate statement.
“Transparent enforcement of the securities laws helps create the environment in which free markets thrive, and enabling both parties in an enforcement action to speak freely contributes to transparency,” she added.
Her statement added that the SEC’s enforcement staff should be able to stand behind the strength of their investigations without relying on restrictions placed on defendants’ speech after settlements are reached.
Peirce had already criticized the policy in early 2024, when the agency under former SEC Chair Gary Gensler was pursuing an aggressive enforcement campaign against crypto firms. At the time, she said the practice weakened regulatory integrity.
More recently, the SEC informed the White House that it intended to eliminate the rule and submitted its rescission proposal to the Office of Management and Budget earlier this month.
Crypto companies have repeatedly challenged the policy over the past several years, particularly as the SEC expanded its enforcement activity against digital asset firms. During 2023 alone, the agency brought 46 crypto-related enforcement actions and collected $281 million in penalties through settlements.
Following the return of President Donald Trump to office, the SEC has either dropped or settled several major crypto cases initiated during the Biden administration. One of the highest-profile resolutions came in May 2025, when the agency reached a $50 million settlement with Ripple Labs.
