Implications of Enforcement’s New Policy Requiring Admissions in Certain Settlements

Gurbir Grewal, new Director of the SEC’s Enforcement Division (Enforcement), recently spoke about Enforcement’s role in restoring the public’s faith in the financial markets and financial institutions. Among other things, Grewal noted the importance of crafting appropriate remedies for securities violations, including requiring admissions by violators settling enforcement actions. Grewal’s statements regarding admissions have raised concerns because the SEC’s practice has generally been not to require parties settling enforcement actions to admit wrongdoing. The Hedge Fund Law Report spoke to H. Gregory Baker, partner at Patterson Belknap and former Enforcement attorney, about this change in policy and the possible implications for the SEC and for the entities and individuals regulated by it, as well as Grewal’s comments regarding changes to the Wells process. For additional insights from Baker, see “SEC Sanctions Unregistered Fund Adviser for Regulation SHO Violations” (Sep. 30. 2021).

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