SEC Rescinds Decades-Old 'No-Deny' Settlement Policy and Will Not Enforce Past Provisions

The Securities and Exchange Commission on Monday rescinded a decades-old settlement policy that required many defendants who resolved enforcement cases with sanctions to agree not to publicly deny the agency’s allegations.

The practical change is broader than simply ending the rule for future cases. The SEC also said it will not enforce no-deny provisions already included in older settlements and will not ask courts to vacate consent judgments or reopen administrative proceedings because a settling party later publicly denied the allegations. In the final rule, the agency said, “In light of the rescission of Rule 202.5(e), the Commission will not enforce existing no-deny provisions that have already been entered.”

“For more than 50 years, the Commission has conditioned settlement on a defendant’s promise not to publicly deny the Commission’s allegations. I am pleased that we are rescinding the no-deny policy today,” SEC Chairman Paul S. Atkins said in a statement. “Speech critical of the government is an important part of the American tradition. This recission ends the policy prohibiting such criticism by settling defendants.”

The SEC adopted the final rule on May 18, removing Rule 202.5(e), though the change becomes formally effective when it is published in the Federal Register. The agency said it had good cause to make the rescission effective upon publication. The move does not change the SEC’s separate approach to admissions in settlements: the agency still may resolve cases on a neither-admit-nor-deny basis, and it still retains discretion to require admissions in cases where it chooses.

In plain terms, the old setup worked this way: for decades, many SEC enforcement matters were settled without the defendant admitting or denying the allegations, but with a separate promise not to later publicly deny them. Rule 202.5(e) codified that policy for cases in which a sanction was imposed. By repealing it, the SEC is changing a basic term that shaped settlement negotiations for more than half a century.

The agency said one reason for the change was that the old policy offered limited practical benefit. It said it was not aware of any instance in which it had previously asked a court to vacate a consent judgment or reopen an administrative case because a defendant publicly denied the allegations after settlement. That, the SEC suggested, made the remedy attached to the rule of little real use.

The SEC also said the policy had become harder to administer in the social media era, when it can be difficult to determine what qualifies as a “public” denial and to monitor how statements spread online. It added that most other federal agencies, including the Justice Department, do not use a similar rule. The commission said more flexibility in settlement terms could also help speed recoveries for harmed investors by making it easier to resolve cases.

The change is a significant operational shift for companies, executives and defense lawyers negotiating with the SEC because it removes a long-standing speech restriction from the settlement process. It also gives settling parties in older cases clarity that the agency does not plan to pursue them for violating no-deny language already on the books.

The policy dated to 1972, and its repeal follows years of legal challenges and petitions arguing that the rule raised free speech concerns. The SEC’s rulemaking cites cases including Romeril, Novinger and Powell v. SEC, a 2025 Ninth Circuit case that rejected a facial First Amendment challenge. Even so, the agency said the broader debate over the policy continued, including a petition seeking Supreme Court review. Monday’s action marks a notable shift in SEC enforcement practice under Atkins, both as a regulatory change and as the unwinding of a speech-related condition that had governed settlements for more than 50 years.