We previously wrote about the U.S. Securities and Exchange Commission’s (SEC) May 2026 withdrawal of its longstanding no-deny policy, under which a settling party generally could not deny the SEC’s allegations. At that time, we noted that a company settling with the SEC could now issue a statement disagreeing with the agency’s allegations, asserting it does not believe it violated the securities laws, and noting it settled solely to avoid the cost and distraction of litigation. We assumed such denials would likely be made in connection with future settlements.
Well, we were partially right. In July 2026, an investment adviser, Deccan Value Investors, spoke out and “categorically reject[ed]” the findings in an SEC settlement order. But the settlement order was entered in August 2022, nearly four years ago.
In the August 2022 settlement order, the SEC charged Deccan and its founder with violations of the federal securities laws. The SEC alleged that, in connection with certain client redemptions from funds Deccan advised, Deccan breached its fiduciary duties and violated the Investment Advisers Act of 1940, and the founder caused those violations. To settle the SEC’s claims, Deccan agreed to pay a penalty of about $1.1 million, its founder agreed to a penalty of $500,000, and both parties agreed to non-monetary undertakings.
In its recent statement about the settlement, Deccan expressly rejected the findings in the SEC’s settlement order; maintained that it “acted lawfully, in good faith, and consistent with its fiduciary obligations”; and stated that it only settled “to avoid greater legal expenses and distractions.” Deccan added that it “settled with the SEC in 2022 to move forward despite multiple disagreements with several points” in the settlement order.
Surely, there are other companies and individuals who disagreed with certain terms in prior SEC settlements but nevertheless made business decisions to resolve those matters. Whether those parties would find it productive or desirable now to publicly state their views on old settlements – that many beyond the settling parties have likely forgotten – remains to be seen. The benefit of such statements about prior settlements is perhaps debatable.
But for future SEC settlements, after rescission of the no-deny policy, we expect to see more settling parties issue statements disputing the SEC’s allegations when the settlements become public. Settling parties may appreciate the opportunity to dispute the SEC’s version of events and to mitigate the direct and collateral consequences of the settlement.