In June of 2013, U.S. Securities and Exchange Commission (SEC) Chair
Mary Jo White announced one of the most significant reforms to the agency’s
settlement policies in its eighty-year history of regulating the financial markets.
In certain cases of “egregious” conduct, the Commission would require from
defendants an explicit admission of wrongdoing as a non-negotiable condition
of settlement. In these cases, the agency’s time-honored policy of allowing
defendants to neither admit nor deny the SEC’s factual allegations—while
disgorging their ill-gotten gains and paying penalties—would not apply. Chair
White has championed this asterisk to its “no admit, no deny” policy as a
common-sense move towards greater public accountability, but the liability
ramifications for defendants could be sweeping and grave.

This Note provides an analytical framework for evaluating or controlling the
likelihood of collateral estoppel effects of a given settlement containing an
admission. Part I recounts the history and development of the agency’s admissions
policy, with particular emphasis on events since the Financial Crisis of
2007–2008. Practitioners with a firm understanding of the policy and its origins
are advised to skip directly to Part II. Part II unpacks the collateral estoppel
doctrine in the context of SEC settlements containing admissions of fraudulent
corporate misconduct by assessing the viability of estoppel in subsequent
criminal prosecutions, the viability of estoppel in subsequent private actions,
and the scope of issues precluded where the doctrine does apply. This Part also
provides a short survey of other potential consequences of admissions. Part III
examines as case studies the first eight SEC settlements containing admissions
of wrongdoing, extracted in the first year of the new regime, and makes general
observations about the agency’s implementation of the new policy.