The judiciary and lawmakers alike have criticized the Securities and Exchange Commission’s (SEC) “no admit, no deny” settlement policy.
In his opinion rejecting the Citigroup settlement, Judge Jed Rakoff wrote, “In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. … The SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges.”
Massachusetts Sen. Elizabeth Warren is among the legislators to speak out against the “no admit, no deny” policy, particularly in the context of Wall Street reform. “I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions to trial … the regulator has a lot less leverage in settlement negotiations,” she wrote in a May letter to SEC Chairman Mary Jo White, Federal Reserve Chairman Ben Bernanke and Attorney General Eric H. Holder.
In response White said the SEC always analyzes “whether a proposed settlement advances the public interest by obtaining the relief that we could reasonably expect to receive at trial.”