October 27, 2025
What happened?
On September 26, 2025, Chairman Paul Atkins announced a change in how the SEC evaluates settlement offers in enforcement actions that are accompanied by contemporaneous requests for SEC waivers from automatic disqualifications and other collateral consequences from the underlying enforcement action. He announced the restoration of “the Commission’s prior practice of permitting a settling entity to request that the Commission simultaneously consider an offer of settlement that addresses both an underlying Commission enforcement action and any related waiver request.” To support returning to this practice, Atkins said it would promote fairness, encourage economy of SEC resources, and enhance efficiency.
In 2019, SEC Chairman Jay Clayton raised the same issue during the first Trump administration, concluding that by allowing concurrent reviews of enforcement actions along with settlement offers and waiver requests, it would benefit both investors and the Commission. In 2021, Acting Chair Allison Herren Lee separated review of settlement offers and waiver requests, stating she did not believe that enforcement actions and settlement waivers should be tied together because there was a risk some violators would continue to ignore applicable rules and not be appropriately disqualified, limiting investor protection, especially in the private offering space. Lee was concerned that the waiver would become a “default position under the law.”
What does this mean for firms?
Combining the consideration of settlement offers and related waiver requests would be more efficient, lower legal costs, and consume fewer resources for all parties, as well as provide for a speedier return of any funds to harmed investors instead of waiting for litigation to resolve.
While this approach is available to all types of firms, it is worth noting that this would mean that private fund managers who are subject to an administrative proceeding and rely on exemptions/safe harbors would not be subject to an automatic disqualification. Instead, managers of the private fund could have the opportunity to move forward following a single review. Therefore, some may view this latest statement on the matter to be focused on ensuring that there is not a potential disruption in, or additional hurdles for, facilitating capital formation. Capital formation is one of the three core objectives of the Commission under Atkins leadership.
Other collateral disqualifications can range from preventing a firm or an individual from collecting solicitation fees to barring a firm or an individual from the investment industry.
Further, as Chairman Clayton noted in 2019, there can “be more flexible or creative” solutions offered in a settlement and waiver request that mitigate the risk of repeat violations that might not be entertained when settlement offers and waiver requests are separately considered. Finally, the concurrent approach offers an opportunity for closure for the SEC and the defendants, bringing certainty to a matter without consuming additional resources that the SEC could allocate elsewhere to meet its mission.
