U.S. Securities and Exchange Commission building in Washington, D.C. Jan. 5, 2019. The SEC's New Approach to Neither-Admit-Nor-Deny Policy May Not Be So New After All
The SEC's newly appointed Director of the Division of Enforcement, Gurbir Grewal, recently announced a potentially significant change to the policy, indicating that the SEC will require admissions in certain matters.
December 03, 2021 at 02:30 PM
7 minute read
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.
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