SEC Removes 50-Year ‘Gag Rule’ in Major Shift to Enforcement Policy

The US Securities and Exchange Commission (SEC) has officially removed a long-standing policy that prevented defendants from publicly denying allegations after settling enforcement cases. The rule, often called the “gag rule,” had been in place since 1972 and required companies or individuals to avoid publicly challenging the SEC’s claims once a settlement was reached.

SEC Ends Longstanding No-Deny Policy

SEC Chair Paul Atkins said the decision marks an important change in how the agency handles settlements. He explained that, for more than 50 years, defendants had been forced to agree not to deny allegations if they wanted to settle cases with the regulator.

Atkins said removing the rule gives the SEC greater flexibility in resolving enforcement actions and ends a policy that many critics believed restricted free speech.

The SEC also stated that the rule sometimes created the impression that the agency was trying to avoid criticism. By ending the policy, the commission said it now aligns with most federal agencies, which do not impose similar restrictions on settling parties.

Crypto Industry May Benefit From Policy Change

The decision could have important effects on crypto companies that have faced SEC lawsuits in recent years. Several digital asset firms previously criticized the no-deny rule, arguing it unfairly limited their ability to publicly explain or defend their position after settlements.

Under the current administration, the SEC has already settled or dropped several major crypto related cases started under previous leadership. One of the most notable examples was the $50 million settlement involving Ripple Labs in 2025.

Hester Peirce Supports SEC Rule Change

SEC Commissioner Hester Peirce welcomed the move, saying forced silence in settlements does not benefit markets or investor protection. She had previously criticized the rule, arguing it weakened regulatory transparency and trust.

Although the SEC said it will stop enforcing existing no-deny clauses, the agency may still require some defendants to admit liability or facts depending on the case.