The U.S. Securities and Exchange Commission (SEC) on Monday repealed a policy that for more than 50 years had barred defendants who settled enforcement actions from publicly denying the agency's allegations. The rule, first adopted in 1972, required settling parties to agree not to challenge the SEC's claims in public, nor to authorize others to do so on their behalf.
The Old Rule and Its Demise
The original rationale: settlements should not create an impression that penalties were imposed for conduct that never happened. But that logic faced mounting criticism. SEC Chair Paul Atkins said in a statement: "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." Atkins noted the policy had placed "unnecessary limits" on criticism of the agency. The SEC clarified that it still may require certain defendants to admit wrongdoing as part of future settlements, but existing no-deny provisions will no longer be enforced.
Peirce: Forced Silence Hurts Transparency
Commissioner Hester Peirce backed the move in a separate statement. "Settlements shrouded in forced silence by the non-governmental party do not serve either the markets or the Commission's investor-protection mission," she said. She argued that transparent enforcement helps free markets thrive, and allowing both sides to speak freely contributes to transparency. Peirce had criticized the rule as early as 2024, when the agency under then-Chair Gary Gensler was aggressively targeting crypto firms. She then said the practice weakened regulatory integrity.
The SEC informed the White House of its intent to kill the rule and submitted the rescission proposal to the Office of Management and Budget earlier this month, according to the agency.
Impact on Crypto Industry
The no-deny policy had been a frequent target for crypto companies as the SEC ramped up enforcement against digital asset firms. In 2023 alone, the SEC brought 46 crypto-related enforcement actions and collected $281 million in penalties through settlements. Since Donald Trump returned to the White House, the SEC has dropped or settled several major crypto cases launched under the Biden administration, most notably a $50 million settlement with Ripple Labs in May 2025. The repeal of the no-deny rule marks another shift: defendants can now publicly defend themselves without risking a breach of their settlement terms, potentially altering the power dynamic in future regulatory cases.