On September 26, 2025, the Securities and Exchange Commission (SEC) reinstated its 2019 policy of simultaneously considering offers to settle enforcement actions and requests for waivers of collateral consequences of those actions, reversing a 2021 shift that had separated settlement negotiations from waiver decisions. These waivers—which enable settling parties to, for example, retain well-known seasoned issuer (WKSI) status or rely on certain safe harbors—can be critical for companies seeking to maintain access to capital markets and avoid reputational harm. The 2021 shift was intended to preserve the independence of the waiver process and ensure that such requests were evaluated on their own merits, free from the leverage of enforcement negotiations. However, that policy drew criticism from two Commissioners, who asserted that it created “an unwieldy process that treats as completely separate what is in fact interrelated,” resulting in delays between the initiation and resolution of enforcement matters.
By reuniting settlement and waiver decisions, the SEC aims to provide greater efficiency and predictability for companies facing enforcement actions. The SEC emphasized that it retains discretion to sever the two processes when appropriate, preserving flexibility in complex or sensitive matters. Notably, the SEC effectively restored the use of contingent settlements, clarifying that it may still approve a settlement while denying a waiver request and underscoring that simultaneous consideration does not guarantee favorable outcomes on both fronts. In such cases, the negotiating party must promptly decide whether to move forward with the settlement as accepted or withdraw its offer with the understanding that such withdrawal may result in the loss of negotiated terms and possibly litigation. For companies, this change could streamline negotiations and reduce the risk of collateral consequences derailing a settlement. It also signals a more pragmatic enforcement posture—one that balances accountability with market stability. Companies navigating SEC investigations should take note of this shift and consider how it may affect their strategic approach to settlement discussions and risk management.