In determining whether to seek admissions in the settlement of an enforcement action, the SEC will not take into account any collateral consequences that might befall the defendant in question.
Recent changes in the “nether admit/nor deny” policy is not about collateral consequences. Instead, the SEC is determining if admissions are justified based upon the need for accountability. The SEC will have to try those cases where the defendant refuses to make an admission. Collateral consequences, including follow-on private securities litigation and other enforcement actions by foreign and domestic authorities, are a main reason that defendants balk at admitting to SEC violations. Additionally, given that the SEC will have to pick and choose the cases where it wants admissions, it is incumbent upon the SEC to closely monitor how such decisions are reached, and their attendant costs and benefits.
However, it seems that the SEC could achieve accountability without demanding admissions.