In the Headlines
July 13, 2022

Fifth Circuit Invites Constitutional Challenges to SEC’s ‘No Admit, No Deny’ Policy

The Texas Lawbook

Litigation attorney Jessica Magee was quoted in The Texas Lawbook about a federal appellate court's reaction to the ongoing U.S. Securities and Exchange Commission's (SEC) "don't discuss" settlement provision. A panel of the U.S. Court of Appeals for the Fifth Circuit ruled that the SEC's use of administrative law judges violates the Seventh Amendment right to trial by jury, and the SEC is appealing. Recently, two judges on a separate panel of the court issued a concurring opinion that invited other defendants to challenge the agency's "no admit, no deny" policy. Ms. Magee commented on the opinion, especially one of the judges' characterization of the provision as "bind[ing] a party to a consent decree to never voice opposition to the underlying facts." 

“It is clear from her concurring opinion in Novinger that she isn’t backing off that view, and I think it’s fair to expect to see more fights like this, positioning the agency’s ‘no admit, no deny’ policy as a ‘gag order’ prohibiting any form of truthful discussion about a prior case...As is often the case though, the devil is in the details of what a former defendant says (or wants to say), to whom, when and why,” said Ms. Magee. “Imagine a prior defendant who agreed to settle negligence or strict liability charges when she could not afford to litigate now wanting to candidly explain the circumstances of the prior action in order to be transparent as part of job interview process...I would hope this sort of truthful disclosure is not the sort of speech the SEC wants to avoid, but the risk of being wrong to a one-time defendant can certainly have a chilling effect on even the most appropriate form of discussion."

READ: Fifth Circuit Invites Constitutional Challenges to SEC’s ‘No Admit, No Deny’ Policy (Subscription required)

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