SEC Moves to Rescind 50-Year-Old "No Admit, No Deny" Settlement Policy

SEC Plan to End ‘Gag Rule’ on Settlements Moves to White House Review

The White House is reviewing a plan for the Securities and Exchange Commission to end its decades-old policy that lets companies and people settle enforcement actions without admitting wrongdoing if they also promise not to dispute the allegations.

The White House Office of Management and Budget received the regulator’s measure to end the policy — known among critics as the “gag rule” — on May 8, according to a post on a government website.

The SEC for more than 50 years has allowed parties to settle without admitting wrongdoing, but they risked voiding the deal if they publicly pushed back on the findings.

The Insider-Trading Scandal That Is Rocking M&A Law Firms

Despite his Ivy League pedigree, Nourafchan was a midlevel deal lawyer who hopped among prestigious firms. He got his start at Sidley Austin and spent a few years at Latham & Watkins before he was let go in 2021. Goodwin terminated him in August 2023 after he hadn’t worked on a billable matter for months.

His main reason for showing up at the office, according to court records and people familiar with the matter, was to sift through computer systems to uncover pending deals that he could sell to an ever-growing ring of traders in Florida, New York, Russia and Israel. He even tried to get hired at a public-relations firm that worked on mergers after he left his last law-firm role, hoping to scoop up more tips there, prosecutors said.

Jarkesy Challenges Reach State Administrative Proceedings, but Seventh Amendment Still Stops at Federal Line

The post-Jarkesy litigation landscape is developing as anticipated. Litigants are increasingly invoking the Supreme Court’s decision in SEC v. Jarkesy (No. 22-859) to challenge the constitutionality of state administrative enforcement proceedings, particularly where agencies seek punitive monetary penalties through in-house tribunals without a jury trial rather than courts.

Two notable examples are now pending before the Delaware and Arizona Supreme Courts. In both matters, the parties argue that state agencies cannot constitutionally pursue fraud-based or securities-related penalty actions through internal administrative proceedings without affording defendants a jury trial.

The Delaware case, Swan Energy, Inc. v. Investor Protection Unit (No. N24C-03-071 MAA), involves an administrative securities fraud action seeking substantial civil penalties. Swan argues that, under Jarkesy, claims seeking monetary penalties and analogous to common-law fraud must be tried before a jury rather than adjudicated internally by the same agency prosecuting the case. The Arizona case, EFG America v. Arizona Corporation Commission (No. CV-25-0134-PR), presents a similar challenge involving the Arizona Corporation Commission’s ability to impose civil penalties through administrative proceedings without a jury.

Andrew Left heads to trial as short-selling faces a legal reckoning

Andrew Left, one of Wall Street’s most outspoken short sellers, is standing before a Los Angeles jury this week as his long-anticipated criminal trial finally gets underway.

Jury selection is set for Monday in the case brought by the U.S. Department of Justice, which alleges that Left used his considerable media platform – cable television appearances, social media posts, and a newsletter followed by thousands of retail and institutional investors – to manipulate stock prices while secretly trading against his own public positions. Prosecutors say he reaped at least $16 million in profits through the scheme over roughly five and a half years.

Left, who founded Citron Research and became known for colorful, pointed reports targeting companies he deemed fraudulent or overvalued, has pleaded not guilty. His attorneys say he “acted in good faith in making honest public commentary” and argue there is no legal requirement compelling him to hold a position for any particular length of time after publishing his views.