May 19, 2026
What happened?
On May 18, 2026, the SEC rescinded the “no-admit/no-deny” policy under Rule 202.5(e), which stated that when the Commission imposes a sanction, it will not accept a settlement unless the defendant or respondent agrees never to publicly deny the allegations in the complaint or administrative order. This policy allowed defendants to settle enforcement actions without admitting wrongdoing so long as they agreed not to publicly deny the allegations.
For over 50 years, the result of the policy was an efficient settlement process with the SEC that avoided conflicting public narratives and backlash for the Commission. Critics pointed to the gag rule’s limitation on free speech for defendants that could not push back on reputational harm without voiding the settlement. With the rescission of the rule, that restriction will end, and the floodgates for public denials will begin to open.
“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,” said SEC Chairman Paul S. Atkins in the press release. “Speech critical of the government is an important part of the American tradition. This recission ends the policy prohibiting such criticism by settling defendants.”
What does this mean for me?
Of course, it was not just a “no-deny” policy, as Chairman Atkins referred to it. It is the no-admit/no-deny policy, and if defendants are now free to deny allegations, that means the SEC is free to pursue admissions of guilt as part of settlement negotiations. It also means the one-sided, SEC narrative for settled enforcement actions will be replaced by a very public, two-sided narrative. Where the gag rule led to quick resolutions, an enforcement action running parallel with public disagreements in the media may change how defendants approach settlements and how the SEC and the market itself react to allegations. Notably, Elon Musk and Mark Cuban were both critical of the policy when they settled with the SEC. Both petitioned to change the policy and actively supported the push to rescind it.
For compliance programs, the rescission of the SEC’s no‑admit/no‑deny policy means evaluating how this new development impacts the firm’s approach to enforcement actions and public communications strategies. We will continue to monitor regulatory updates and new developments that impact investment advisors. If you have questions, contact us. Fairview is here to help.
