Just Admit It – SEC Requiring Admissions With Increased Frequency

As we previously reported, in 2012 and 2013 the Securities and Exchange Commission (SEC) changed its longstanding policy of permitting defendants to settle enforcement actions without admitting or denying liability. Initially, the policy was changed only with regard to settlements involving parallel criminal actions. Subsequently, the policy was further revised to require admissions in certain other cases, namely where:

• there was misconduct that harmed large numbers of investors, or placed investors or the market at risk of potentially serious harm;
• admissions might safeguard against risks the defendant posed to the investing public, particularly when the defendant engaged in egregious intentional misconduct; or