The Securities and Exchange Commission will stop letting companies and individuals say they "neither admit nor deny" wrongdoing in a civil case when they admit to related criminal charges.
A federal judge said he threw out a $285 million deal in November between the SEC and Citigroup in part because the SEC settlement said that.
The change, which the SEC disclosed Friday, will take effect right away.
But it won't apply to the Citigroup case _ or to most SEC settlements. It will affect only SEC cases in which authorities such as the Justice Department file related criminal charges against a company or individual, and the company or person admits guilt in resolving the criminal charges. The SEC files only civil charges.
Enforcement officials at the SEC have been considering the change since last spring, SEC Enforcement Director Robert Khuzami said in a statement.
The change appears to be aimed at lining up the language in SEC settlements with what's said in related criminal deals. Last month, for example, Wachovia Bank _ a unit of Wells Fargo & Co. since 2008 _ agreed to pay $148.2 million to settle federal and state charges that it rigged dozens of bidding competitions to win bond business from cities and counties.
The bank neither admitted nor denied the SEC's allegations. But in its settlement with the Justice Department, Wachovia admitted manipulating the bidding process.
Khuzami made clear that the change won't affect the SEC's approach in settlements where companies don't admit and aren't convicted of violations in related criminal cases. He said his agency has appealed the November ruling rejecting the settlement with Citigroup.
In that case, U.S. District Judge Jed Rakoff said the SEC's policy of allowing defendants to neither admit nor deny allegations makes it hard for judges to know whether the penalties they are paying in settlements are justified by the facts. As in most SEC cases, only civil charges were brought against Citigroup and resolved. There was no related criminal case.