The Securities and Exchange Commission has rescinded its 50-year-old gag rule, allowing defendants in enforcement actions to proclaim innocence while settling cases. The agency confirmed Monday it will no longer require silence as a condition of settlement, ending a policy that critics called coercive and unconstitutional.

For decades, the SEC maintained a strict policy refusing to settle cases unless defendants agreed not to publicly deny allegations. This practice effectively silenced defendants who chose settlement, forcing them to either sacrifice their right to contest accusations or face protracted litigation. The policy applied across all enforcement actions regardless of merit.

The change fundamentally reshapes the securities enforcement landscape. Companies and individuals facing SEC actions now gain significant leverage in negotiations, as they can settle without surrendering their right to deny wrongdoing. Market observers predict this shift will increase settlement costs for the agency while reducing its ability to pressure defendants through procedural tactics.