SEC Rescinds “No Admit, No Deny” Rule
On May 18, 2026, the SEC rescinded its rule adopted in 1972 prohibiting defendants and respondents from denying allegations in enforcement action settlements, also known as the “gag rule” or “no admit, no deny rule.”
In a statement, the SEC explained that rescinding the rule codified in 17 C.F.R. § 202.5(e) “aligns the Commission with the overwhelming majority of federal agencies that do not have a similar rule and gives the Commission more flexibility in settling enforcement actions, which conserves resources, provides certainty, and potentially expedites the return of money to injured investors.” As we described in a previous blog post, this marks a sea change for the enforcement landscape.
Chairman Paul Atkins said that he is “pleased” the rule has been rescinded. He noted that “[s]peech critical of the government is an important part of the American tradition” and this recission “ends the policy prohibiting such criticism by settling defendants.” Commissioner Hester Peirce shared a similar stance stating that “this result is good” and “contributes to transparency” in the enforcement of the securities laws. She similarly underscored the importance of free speech.
Although there is “no known instance” where the SEC has reopened an administrative or civil proceeding due to a violation of the rule, the SEC remarked that it “will not enforce existing no-deny provisions that have already been entered” and will take no action if an existing no-deny provision is breached. Further, the SEC “generally” does not require settling parties to admit allegations and this recission will not “affect the Commission’s discretion to settle with defendants who decline to admit facts or liability or its discretion to negotiate for admissions as part of a settlement.”
We will track how this may impact future settled enforcement actions.
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