SEC Commissioners Square Off Over Enforcement Settlement Process

In one of her first official actions as Acting Chair of the Securities and Exchange Commission (SEC or Commission), Allison Herren Lee reversed a major policy implemented by recently departed SEC Chairman Jay Clayton involving the SEC enforcement settlement process. This decision could significantly impact the SEC settlement process by causing uncertainty for settling entities as to the business consequences of a settlement. In a rare rebuke, two fellow SEC Commissioners promptly issued a statement decrying the Acting Chair's decision.

Collateral Consequences of SEC Settlements

The federal securities laws contain provisions that impose restrictions on entities found to have violated certain statutes or regulations or that become subject to certain court-imposed injunctions or administrative orders. These restrictions, commonly referred to as "collateral consequences," range from prohibiting a settling entity (and possibly its affiliates) from taking advantage of