SEC 'no‑deny' disgorgement proposal reaches White House

The Securities and Exchange Commission has sent the White House a final rule to rescind its policy restricting defendants from denying allegations after settling enforcement cases, according to a public filing on Reginfo.gov. The Office of Information and Regulatory Affairs, or OIRA, received the submission on May 8 and lists it as pending review under RIN 3235-AN77. The filing is titled “Rescission of Policy Regarding Denials in Settlements of Enforcement Actions,” and it is marked as a final rule with no legal deadline and no designation as economically significant. The move would target SEC Rule 202.5(e), the agency’s long-standing “no admit, no deny” settlement policy. That rule bars a defendant from settling an SEC action while publicly denying the allegations, and treats a refusal to admit as a denial unless the party states it neither admits nor denies the claims. The text of the SEC’s new rule has not been made public in the OIRA entry. (reginfo.gov) ### What exactly did the SEC send to the White House? Reginfo.gov says the SEC submitted the matter at the final-rule stage on May 8, 2026. The White House review entry identifies the agency as the SEC and the title as a rescission of the policy regarding denials in settlements of enforcement actions. The entry also shows no legal deadline and no recorded OIRA meetings as of the latest public search results. (jdsupra.com) OIRA review does not itself change SEC settlement terms. The White House process is a checkpoint before a rule can be cleared, returned with changes or withdrawn, and the public listing does not include a timetable for completion. That is what is publicly verifiable from the filing. ### What is the “no-deny” policy the SEC is trying to rescind? SEC Rule 202.5(e) has governed the agency’s settlement practice since 1972, according to legal analyses describing the rule and its history. (reginfo.gov) In practice, settlement orders typically prevent defendants from making statements that directly or indirectly deny the SEC’s allegations or suggest the case lacked a factual basis. If the SEC concludes that a party breached those terms, it can seek to reopen the matter. The Ninth Circuit upheld the rule against a facial First Amendment challenge in an August 2025 decision, according to O’Melveny’s summary of the ruling. The court said settling parties may voluntarily waive certain speech rights, but it also said more specific as-applied challenges could still be brought in future cases. (jdsupra.com) ### Why is disgorgement part of this debate? The Supreme Court heard argument on April 20, 2026, in *Sripetch v. SEC*, a case over when the SEC may obtain disgorgement in enforcement proceedings, according to Akin Gump. The firm said the case could address whether the SEC must show pecuniary harm to victims before obtaining disgorgement in some litigated actions. (omm.com) Akin Gump said disgorgement is often the largest component of SEC financial remedies. The firm cited fiscal 2024 SEC enforcement results showing $6.1 billion in disgorgement and prejudgment interest, compared with $2.1 billion in civil penalties. Those figures help explain why settlement language and post-settlement statements are drawing attention alongside the court fight over the remedy itself. (akingump.com) ### What would change for companies and executives if the rule is rescinded? Akin Gump lawyers said rescission could alter investigations, resolutions and post-settlement communications by allowing settling parties more room to explain or contest the SEC’s factual account after a case ends. The firm said companies often need to describe settlements to investors, auditors, insurers and other regulators, and current practice can make those disclosures difficult to calibrate. (akingump.com) Critics and supporters have framed the issue in opposite terms, but the SEC has not yet published the operative text of the rule now under White House review. Without that text, the exact scope of any change to settlement language, admissions practice or follow-on enforcement remains unclear. ### What happens next, and where can readers track it? Reginfo.gov is the public place to watch the rule’s status under RIN 3235-AN77. (jdsupra.com) The OIRA docket page currently shows the measure as pending review, and the meetings page shows no EO 12866 meetings for that RIN. The next public milestone would be a change in that status or publication of a cleared rule. (reginfo.gov)