When Wall Street Sins, SEC Needs to Extract Confessions: View

The Securities and Exchange Commission last week said it will no longer allow individuals or companies, when settling civil lawsuits, to “neither admit nor deny” wrongdoing if they have been separately convicted in a parallel criminal case. At first glance, it seems the SEC is doing something highly commendable. But there is much less than meets the eye here. The SEC should make further changes to put real meaning behind its attempt at reform, which affects only a small fraction of SEC cases.

The SEC’s enforcement chief, Robert Khuzami, the change “eliminates language that may be construed as inconsistent with admissions or findings that have already been made in criminal cases.” This makes sense, since criminal cases require a higher standard of proof than civil ones. In short, if you’re guilty of the crime, you’re often guilty of parallel civil violations.