Admission of Guilt: Sinking Teeth into the SEC's Sweetheart Deals

20 Pages Posted: 8 Apr 2014 Last revised: 23 Nov 2014

Date Written: April 6, 2014


Throughout its existence, the Securities and Exchange Commission (SEC) has allowed defendants to settle cases without admitting to the allegations of wrongdoing. This "neither admit nor deny" policy has received heavy criticism by judges, Congress, and the public, especially in the wake of the 2008 financial crisis. On June 18, 2013, SEC Chairman Mary Jo White announced the agency’s intention to require admissions of guilt in certain cases. While Chairman White did not articulate a clear standard of when admissions would be required, she did say that the agency would focus on the egregiousness of the defendant’s conduct and the harm to investors. This Article develops a model to help determine which settlements should require an admission of wrongdoing. This model balances the costs of requiring admissions — in resources and litigation expenses, with the social benefits of requiring admissions — both in ensuring that the defendants are responsible for their actions and allowing the public to distinguish between technical violators and the more culpable offenders.

Keywords: Neither Admit nor Deny Policy, Securities Law, Harbinger, Falcone, Chairman White, SEC

Suggested Citation

Lee, Larissa, Admission of Guilt: Sinking Teeth into the SEC's Sweetheart Deals (April 6, 2014). 3 Global Markets L.J. 1 (2014), University of Utah College of Law Research Paper No. 79, Available at SSRN:

Larissa Lee (Contact Author)

Jones Waldo ( email )

170 S. Main St., Suite 1500
Salt Lake City, UT 84101
United States
8015213200 (Phone)

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