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July 27, 2026
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On May 18, 2026, the Securities and Exchange Commission adopted a final rule rescinding Rule 202.5(e) of its Rules of Informal Procedure. This rule eliminated the SEC's 54-year policy that prohibited respondents who settle with the SEC from publicly denying the Commission’s allegations. Given the limited ongoing attention to the rule change, we're publishing this reminder that the rule significantly impacts prior and future respondents in enforcement actions.
Under the SEC's no-admit, no-deny policy, the SEC generally refuses to settle enforcement actions unless the respondent agrees not to publicly deny the allegations in the SEC's complaint. The SEC's new rule rescinds this policy, citing previous constitutionality challenges and the fact that most other federal agencies do not impose comparable no-deny requirements in civil settlements.
The SEC has stated that it will no longer require respondents to agree to no-deny provisions as a condition of settling enforcement actions. Moreover, the SEC will not enforce the no-deny provisions of existing settlements - in the event of a violation, the SEC will not seek to vacate the settlement or reopen the adjudicatory proceeding.
Respondents should consider this new standard as it approaches settlement discussions with the SEC.
