The SEC Stands by a Controversial Phrase

The Securities and Exchange Commission has been criticized by lawmakers and judges for its policy of allowing companies and individuals to settle civil charges without admitting or denying guilt. SEC Enforcement Director Robert Khuzami has defended the practice, saying it produces speedier resolutions. Now the agency has altered its policy—slightly—in a way that does little to address the critics’ complaints.

On Jan. 6 the SEC said it was modifying its boilerplate settlement language to require that defendants admit wrongdoing when they have already done so in parallel criminal proceedings. In cases where there has not been a criminal conviction, “neither admit nor deny” will still be the rule. “The new policy does not require admissions or adjudications of fact beyond those already made in criminal cases, but eliminates language that may be construed as inconsistent with admissions or findings that have already been made in criminal cases,” Khuzami said in a statement. The SEC files only civil cases. It can refer cases to the Justice Dept. for criminal prosecution.