United States: The SEC Finally Admits It, The No-Admit/No-Deny Policy Is Gone

By: Thoreau Bartmann, Meghan Flinn, Ted Kornobis, Hayley Trahan-Liptak, and Neil Smith

On 18 May 2026, the United States Securities and Exchange Commission (SEC) rescinded the rule barring settling defendants from publicly denying the agency’s allegations. The policy, in place since 1972, effectively silenced settling defendants on pain of having their cases reopened. Now, defendants can publicly dispute SEC allegations, including under existing consent judgments.

The Commission cited four reasons for the change: its only available remedy for a breach—case reopening or asking a district court to vacate the settlement—has never occurred; social media made policing “public” denials increasingly impractical; virtually no other federal agency, including the DOJ, operates under a comparable constraint; and eliminating the rule gives enforcement staff more flexibility to reach settlements and return money to harmed investors.

Commissioner Hester Peirce, who had long pushed for this change, was blunt in her support: “settlements shrouded in forced silence by the non-governmental party do not serve either the markets or the Commission’s investor-protection mission.”

While the repeal may seem like a win for settling defendants, the practical implications remain unclear. Changing the status quo may present downsides, both as part of the settlement and in ancillary contexts, such as shareholder litigation.

Key Takeaways

Existing No-Deny Provisions Will Not Be Enforced

The SEC will not reopen settled matters if a defendant now publicly disputes prior allegations. Parties with legacy consent judgments may speak more freely—but consult counsel first, as the underlying court order remains in place and commenting on previously settled matters could lead to legal exposure in other contexts.

Admissions Remain on the Table

The SEC retains full discretion to demand admissions of fact or liability, and is likely to press harder for them now that the no-deny backstop is gone.

Potential for More One-Sided Factual Recitals

Without a no-denial clause, the SEC could seek to embed more unflattering factual allegations in their charging documents. Settling defendants should continue to negotiate the factual narrative carefully—those recitals could impact related litigation and public reporting.

Effective Immediately

The rescission governs negotiations happening right now. Any party in active settlement discussions should reassess their posture in light of the changed landscape.