Since 1972, the Securities and Exchange Commission (SEC) has generally allowed companies and individuals to settle civil enforcement investigations without admitting the SEC's allegations, provided that the settling party also does not deny them. See Securities Act Release No. 5337, Exchange Act Release No. 9882, Investment Company Act Release No. 7526 (Nov. 28, 1972) (codified at 17 C.F.R. §202.5(e)). The SEC's newly appointed Director of the Division of Enforcement, Gurbir Grewal, recently announced a potentially significant change to that policy, indicating that the SEC will require admissions in certain matters. Specifically, Grewal stated that, "in an era of diminished trust, [the SEC] will, in appropriate circumstances, be requiring admissions in certain cases where heightened accountability and acceptance of responsibility are in the public trust." Gurbir Grewal, Director, Division of Enforcement, Remarks at SEC Speaks 2021 (Oct. 13, 2021). He further explained that "[a]dmissions, given their attention-getting nature, also serve as a clarion call to other market participants to stamp out and self-report the misconduct to the extent it is occurring in their firm." Id.

News reports highlighted the importance of Grewal's announcement—and rightly so, as it marks a potentially significant change. Still, the announcement prompts more questions than answers: What are the "appropriate circumstances" in which the SEC will require admissions? In what types of cases does the SEC believe "heightened accountability and acceptance of responsibility are in the public trust"? Companies and individuals facing civil SEC enforcement investigations will need to carefully monitor the SEC's new approach and consider its implications for potential settlement options. This is especially true for individuals who act as corporate "gatekeepers," such as attorneys, compliance personnel, and auditors, whom Grewal said "will remain a significant focus" for the SEC. Id.