SEC Rejects Plea to End ‘Gag Rule’ for Settling Defendants (1)

The Securities and Exchange Commission rejected a nonprofit’s request to rescind its policy that bars defendants from denying the agency’s allegations after a settlement, likely prompting legal action.

The SEC for decades has allowed parties to settle cases brought by the agency without admitting wrongdoing. But it also requires them to promise not to publicly deny the SEC’s allegations.

The agency wrote Tuesday to the nonprofit New Civil Liberties Alliance that the “no admit, no deny” policy—often referred to by critics as the “gag rule"— is reasonable and a proper exercise of its authority to decide how it will handle ...