SEC Rescinds 50-Year-Old Rule Banning Post-Settlement Public Denials

The U.S. Securities and Exchange Commission has rescinded Rule 202.5(e), a policy maintained since 1972 that prohibited defendants from publicly denying allegations following enforcement settlements. The SEC determined the rule's practical benefits were limited and that maintaining it raised constitutional concerns and operational challenges in modern digital communication environments.

The agency stated it would stop enforcing existing no-deny provisions in prior settlement agreements and will no longer attempt to reopen settled cases if defendants later publicly dispute allegations. The rescission is expected to increase settlement flexibility, reduce litigation costs, and accelerate investor compensation where applicable.