SEC Announces New Policy Regarding "Neither Admit Nor Deny" Language in Settlements

On January 6, 2012, Robert Khuzami, Director of the Division of Enforcement at the Securities and Exchange Commission (SEC), announced a change to the longstanding policy of allowing defendants to settle charges without admitting or denying allegations of wrongdoing in a civil injunctive complaint or administrative order.

Under the new policy, settlements will no longer include "neither admit nor deny" language where defendants (1) have been subject to parallel criminal convictions or (2) have signed Non-Prosecution Agreements (NPAs) or Deferred Prosecution Agreements (DPAs) that contain admissions or acknowledgments of criminal conduct. Instead of the traditional charging language, settlements will now include language that recites the "fact and nature" of a criminal conviction, NPA, or DPA. Settling defendants will continue to be prohibited from denying the factual allegations made by the SEC.