The SEC has rescinded Rule 202.5(e), the no-admit/no-deny policy originally adopted in 1972 that prohibited settling defendants from publicly denying the allegations in an SEC complaint or administrative order. The SEC can still settle cases on a no-admissions basis, and can still seek admissions in particular cases, but settling parties will no longer be required by Rule 202.5(e) to agree not to deny the allegations. The change may alter settlement dynamics in a handful of ways.
1. Settling parties have more room to speak. A company or individual that settles with the SEC will no longer be barred by the settlement itself from saying it disagrees with the allegations. That may matter where the reputational stakes are high. But public denials still carry risk. They may affect relationships with regulators, invite scrutiny from the press, or complicate related private litigation.
