Neither admit nor deny is here to stay, SEC settlement policy unlikely to be changed by Congress

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Neither admit nor deny is here to stay, SEC settlement policy unlikely to be changed by Congress

Neither admit nor deny is here to stay, SEC settlement policy unlikely to be changed by Congress

H/T Alison Frankel

This will allow those breaking the law to continue. It’s an addiction!

 

[REUTERS]

U.S. lawmakers showed little support on Thursday for tinkering with a regulatory policy of settling cases without requiring defendants to admit to misconduct.

U.S. District Judge Jed Rakoff last year rejected a proposed settlement between the Securities and Exchange Commission and Citigroup Inc, and said he could not assess whether it was fair because it did not require the bank to admit or deny liability.

Since such neither-admit-nor-deny language is common for most federal agencies, Rakoff’s order set off a major debate in the securities world over whether enforcers should more often require defendants to admit to wrongdoing.

At a congressional hearing on Thursday officials from four agencies — the SEC, the Federal Reserve, the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency — said requiring admissions of misconduct would hurt regulators’ ability to bring cases and would soak up limited resources.

“If you look at the entire package of a settlement,” Robert Khuzami, director of enforcement for the SEC, said ticking off a list that included a “substantial” penalty, a detailed complaint, business reforms and individuals charges, “all told it really has a powerful deterrent message.”

[REUTERS LEGAL]

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