The U.S. Securities and Exchange Commission settles the overwhelming majority of its enforcement actions, most with consent decrees where the defendant “neither admits nor denies” wrongdoing.[1] The SEC has publicly defended its use of “neither admit nor deny” settlements, arguing they: (1) reduce the time and resources required to litigate a case, (2) expedite recovery for defrauded investors, and (3) protect defrauded investors by reducing the risk that the SEC will lose at trial.[2] As John Coffee recently noted, “[e]very few years, the issue is certain to be raised: Why does the SEC persist in ‘neither admit nor deny’ settlements, which allow an issuer to avoid acknowledging any misconduct?”[3]

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