Earlier this month, the S.E.C. changed its long standing practice of allowing defendants of securities violations to “neither admit nor deny” criminal wrongdoing.  This change is effectively the S.E.C.’s response to critics that say that the agency should not let criminal defendants simply pay a fine and avoid an admission of guilty.  The new policy will generally require that defendants having a parallel criminal conviction, entering into a non-prosecution agreement or signing a deferred prosecution agreement no longer be allowed to sidestep admitting their guilt in a settlement with the S.E.C.

While this change seems more just, it is limited to only a small number of cases.  Thus, the change should help ease the concerns of the critics, but will not change S.E.C. policy for most situations.  This will help the S.E.C. look more tough on certain securities violations while still allowing the agency to negotiate settlements by allowing defendants to “neither admit nor deny” wrongdoing in most situations.  It remains to be seen whether the new policy will provide the right balance between the benefit of more easily negotiating settlements without requiring an admission of guilt and punishing criminals to the satisfaction of the critics.

See the recent article in the New York Times