WASHINGTON (Reuters) – Businesses that run afoul of U.S. securities laws will not be able to seek a waiver to keep doing certain types of business as part of their settlement negotiations with the Securities and Exchange Commission (SEC), the regulator announced on Thursday.
The SEC move to separate the practice of granting waivers from settlement talks around enforcement probes suggests it will take a harsher stance on the activity going forward. Companies that are found guilty of criminal conduct or fraud can be barred from certain activities, such as private capital deals, without such an SEC waiver.
The shift, announced by SEC acting Chair Allison Lee, reverses a policy established by her predecessor, Jay Clayton, who said in 2019 that allowing settlement offers to be contingent upon granting such waivers could streamline the process and speed relief to harmed parties.
But Lee said such waivers should not be a “bargaining chip” in negotiations to settle enforcement actions or be treated as a given.
“A waiver is not the default position under the law, and should not be considered one under our processes,” she said in a statement.
The regularity with which such waivers had been granted had been a sore spot for some Democrats, who argued they undermined any punishment for wrongdoing by allowing companies to continue doing business unimpeded.
Under the new policy, companies must agree to settle charges with the SEC’s enforcement team, and separately seek relevant waivers from its divisions of corporate finance and investment management, which will evaluate the requests on their own terms.
(Reporting by Pete Schroeder; Editing by Jonathan Oatis and Paul Simao)
