On Friday, SEC Chairman Paul Atkins reversed the agency’s existing policy of refusing to consider proposed settlements of enforcement proceedings and “bad actor” waiver requests simultaneously. The existing policy was adopted (see second blog) during the early stages of the Biden administration and reversed a policy adopted by former SEC Chairman Jay Clayton. Here’s an excerpt from Chairman Atkins’ statement:

In consultation with the Divisions of Enforcement, Corporation Finance, and Investment Management, I believe that it is appropriate to restore the Commission’s prior practice of permitting a settling entity to request that the Commission simultaneously consider an offer of settlement that addresses both an underlying Commission enforcement action and any related waiver request. This salutary practice promotes fairness and economy of Commission resources but unfortunately was changed by the prior Administration.

An offer of settlement in a Commission enforcement action that includes a contemporaneous waiver request will be presented to the Commission by the staff for simultaneous consideration. This approach will enable the Commission to consider both the proposed settlement and waiver request together, within the context of the relevant facts, conduct, and consequences, and with the benefit of the analysis and advice of the relevant Commission Divisions, to assess whether the proposed resolution of the matter in its entirety achieves the Commission’s three-part mission more generally. This approach will enhance efficiency and certainty in the settlement process and avoid a siloed internal consideration of the matter, which are critical factors in reaching comprehensive settlements that are in the best interests of investors.

This change in policy is good news for targets in enforcement proceedings. Under the policy adopted during Biden administration, targets settling with the SEC faced uncertainty because their settlement proposal and request for a waiver were not considered simultaneously. That left them in a position where they might find themselves bound by a settlement that they would not have entered into absent the belief that a waiver would be granted.

– John Jenkins