SEC Poised to Modify 'No Admit, No Deny' Policy in Settlements
HLM: Why is the SEC doing this?
Andreson: The SEC has been on the receiving end of some criticism both from the bench and others concerning the fact that this policy of 'no-admit no-deny' leads to perhaps a policy that is too lenient and that it really behooves both the government and the public to have a policy with a little bit more teeth. They tried to strike the balance here by including this option now, which gives the SEC more teeth certainly on the negotiating table. It remains to be seen what the effects are but it gives them the teeth they're looking for.
HLM: How will the SEC decide when to apply this new policy?
Andreson: You are going to see this policy evolve over time. They are going to be relatively conservative with how they roll it out. They will identify cases where the evidence is particularly egregious or particularly strong and they will certainly choose those initial cases to roll this out and you will see some flexibility built in down the road as it evolves and people become more aware of it.
More importantly, its significance will be at the negotiating table and perhaps give them results that they otherwise wouldn't be able to obtain for fear of simply the SEC pressing this issue.
HLM: Is there a set-in-stone implementation date? Do they require any legislation to do this?
Andreson: This is something that they have the ability to do on their own. It falls within their purview. I am not sure exactly when they are going to begin this process. This is something that I believe was spearheaded by Mary Jo White, a former federal prosecutor and U.S. attorney for the Southern District of New York.
It is consistent with her prosecutorial approach, a little bit more aggressive. It gives them more leverage. They really wanted to give some teeth to an agency that sometimes finds itself needing more leverage.
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