Second Circuit Signals Support for the SEC’s Use of “Neither Admit Nor Deny” Language in Consent Settlements

16 March 2012
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Key takeaways:

  • On March 15, 2012, the United States Court of Appeals for the Second Circuit granted a stay of district court proceedings in SEC v. Citigroup Global Markets Inc., a case that has drawn much attention following Judge Rakoff's refusal to accept a proposed $285 million settlement that did not require Citigroup to admit wrongdoing.
  • In making this ruling, the panel indicated skepticism as to the reasoning in Judge Rakoff's opinion, which called into question the longstanding practice used by the SEC of allowing a settling party to neither admit nor deny the allegations made against it.
  • Although these issues will now be the subject of full briefing, the panel's opinion appears to forecast likely Second Circuit support for the SEC's continued use of "neither admit nor deny" language in reaching settlements with defendants.