SEC rescinds 50-year 'no-deny' settlement gag rule, freeing defendants to publicly dispute its allegations

The SEC announced on May 18, 2026 that it had rescinded Rule 202.5(e), the 'no-deny' provision of its long-standing 'no-admit, no-deny' settlement framework that, since its adoption in 1972, had required settling defendants to promise not to publicly deny the agency's allegations. SEC Chairman Paul Atkins framed the move in free-speech terms, stating that 'speech critical of the government is an important part of the American tradition' and that the rescission 'ends the policy prohibiting such criticism by settling defendants.' Atkins also noted the change aligns the Commission with the overwhelming majority of federal agencies that lack a comparable rule and argued it gives the Commission more flexibility, conserves resources, and can expedite the return of money to injured investors.

The rule had been incorporated into thousands of settlement agreements over five decades; critics had long argued the structure effectively muzzled defendants while letting the SEC claim vindication through its own settlement papers and press releases. Law-firm analyses cautioned that the change creates both risks and opportunities: defendants who choose to deny allegations publicly after settling may invite reputational and litigation consequences, and the Commission retains discretion over settlement terms.

The public materials reviewed did not disclose a commissioner vote tally or any dissents. The action is widely read as part of a broader recalibration of enforcement practice under the Atkins-led Commission, paralleled days later by a similar move at the CFTC.