Securities regulator shifts language of settlement

WASHINGTON - Reuters

The Washington DC-based Securities and Exchange Commission is responsible for enforcing federal securities laws.

U.S. securities regulators said Dec. 6 that defendants can no longer settle civil cases using “neither admit nor deny” language if they have already admitted to wrongdoing in parallel cases. The change, announced by Securities and Exchange Commission (SEC) Enforcement Director Robert Khuzami, comes just over a month after a federal judge rejected a proposed $285 million settlement between the SEC and Citigroup, in part because the bank had not admitted to wrongdoing. However, in that case, no parallel criminal charges have been filed.

It seemed “unnecessary” for the SEC to include its traditional approach if a defendant had already been criminally convicted of the same conduct, Khuzami said. For years firms have admitted to a narrow set of facts in resolving a criminal case with the Justice Department, while neither admitting nor denying more colorful language in an SEC complaint.