The U.S. Securities and Exchange Commission has officially eliminated a long-standing rule that prevented defendants in enforcement settlements from publicly contesting the agency’s accusations. This policy, initially put in place in 1972, had been criticized for creating an appearance that the SEC was shielding itself from scrutiny, according to regulatory officials.
SEC Chair Paul Atkins announced the rescission, stating that the previous requirement forced settling parties to agree not to publicly dispute the Commission’s claims. Atkins emphasized that this change removes what he described as an unnecessary constraint on defendants’ ability to criticize the agency during settlement agreements. Under the old framework, companies or individuals could not deny the allegations or allow others to do so on their behalf, a rule originally justified to avoid the perception that sanctions were being applied for actions that did not occur.
In a related statement, SEC Commissioner Hester Peirce supported the move, arguing that imposing forced silence on defendants does little to enhance market transparency or protect investors. Peirce noted that transparent enforcement of securities laws is essential for fostering free markets, and allowing both parties to speak freely after settlements contributes to that openness. She also suggested that the SEC’s enforcement staff should have confidence in their investigations without relying on speech restrictions.
Peirce has previously criticized this policy, especially during the Biden administration when the SEC, under former Chair Gary Gensler, aggressively pursued cryptocurrency firms. In early 2024, she argued that the practice undermined regulatory integrity. More recently, the SEC submitted its rescission proposal to the Office of Management and Budget before finalizing the change.
Crypto companies have increasingly challenged this rule as the SEC ramped up enforcement actions against digital asset entities. In 2023 alone, the agency initiated 46 crypto-related actions and collected $281 million in penalties through settlements. Since President Donald Trump returned to office, the SEC has dropped or settled several major crypto cases from the previous administration, including a high-profile $50 million settlement with Ripple Labs in May 2025.
The SEC also clarified that it may still require certain defendants to admit liability or wrongdoing in future settlements, and existing no-deny provisions will no longer be enforced.