SEC ‘Gag Rule’ Pullback Leaves Room for Harsh Settlement Terms

The SEC’s decision to rescind its “gag rule"—a core element in more than a half century of enforcement settlements barring Wall Street defendants from publicly denying the regulator’s allegations—means it’s still able to push for tough terms in those deals, securities lawyers warned.

Chairman Paul Atkins framed the May 18 rollback as a move to support free speech, allowing companies and individuals named in SEC enforcement actions to criticize the government.

The Securities and Exchange Commission was one of just a few regulators that had required defendants settling enforcement actions to sign no-deny provisions. The Commodity Futures Trading Commission is ...