Careers

Diversity, Equity & Inclusion

Experience

Innovation

Interactive Maps

Locations

About

Pages

Meet our team of innovators
Ask us how we do it

Professionals

Insights

Services

Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

Home | Thompson Hine LLP

Atlanta

Chicago

Cincinnati

Cleveland

Columbus

Dayton

Los Angeles

Minneapolis

New York

Silicon Valley

Washington, D.C.

On May 18, the SEC overturned a seminal settlement policy that has stood for over 50 years: remaining silent in settlement (otherwise known as the “gag rule”).

contentpilot/introduction

Previously, Rule 202.5(e) adopted the SEC’s policy that a civil lawsuit or administrative proceeding defendant could not consent to an order settling a matter while also denying the allegations. This policy popularized the “without admitting or denying” language so ubiquitous in SEC settlements. This is no longer the case.

core/paragraph

Its abrupt rescinding of this policy means that the SEC will no longer require defendants to agree to such settlement conditions, nor seek to enforce them in existing settlements.

Rumors of potential policy changes have been brewing since August 2025, when the Ninth Circuit upheld the gag rule in Powell v. SEC, holding that defendants could voluntarily waive constitutional rights in settlement, but acknowledging that the rule raised “legitimate First Amendment concerns.”

SEC Chairman Paul Atkins <a href="https://www.sec.gov/newsroom/press-releases/2026-45-sec-rescinds-policy-regarding-denials-settlements-enforcement-actions" target="_blank" rel="noreferrer noopener">framed the change as a First Amendment protection</a>, stating that “[s]peech critical of the government is an important part of the American tradition. This rescission ends the policy prohibiting such criticism by settling defendants.”

core/heading

In the wake of this move, parties may negotiate more heavily over settlement language and feel freer to make true (and not misleading) post-settlement statements. However, the SEC may also push for admissions more frequently or seek more onerous terms or conditions.

Industry experts question whether eliminating the gag rule will change much for the average defendant. Parties will be free to continue to pursue “neither admit nor deny” language, and they should consider that the SEC’s findings may still carry weight and responding may cause the story to linger. Many subjects of SEC action may prefer to minimize the media attention that comes with a public rebuke. And, importantly, the SEC retains discretion to demand admissions on a case-by-case basis.

Parties are strongly advised to consider retaining experienced regulatory counsel when negotiating settlement language with the SEC before insisting on including the option of commenting on the settlement.

core/separator

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2026/05/Investment-Management-Update-SEC-Nixes-Neither-Admit-nor-Deny-Settlement-Requirement.pdf

No Comment: SEC Nixes “Neither Admit nor Deny” Settlement Requirement

Services