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Clayton Clarifies Streamlined Settlement, Waiver Negotiation Process

SEC Chairman Jay Clayton in a public statement announced an enhanced process for firms seeking to resolve settlements of enforcement actions. Under the securities laws, wrongdoing entities can be barred from the industry or from taking advantage of certain exemptions or benefits as a result of enforcement actions. The SEC, however, has the authority to grant a waiver from these disqualifications. Clayton pointed out that although settlement offers and waiver requests have generally been made at the same time, in recent years the SEC has considered these matters almost exclusively on a segregated basis, sometimes lengthening and adding complexity to the process. Clayton’s statement makes clear that firms can request that the SEC consider an offer of settlement that simultaneously addresses both the underlying enforcement action and any related collateral disqualifications. This means that a negotiated offer of settlement that includes a simultaneous waiver request negotiated with all relevant SEC divisions will be presented to, and considered by, the Commission as a single recommendation from the staff. Clayton says this approach will “honor substance over form.” He added that the Commission will consider the relevant facts and conduct and advice from the SEC’s divisions to assess whether the proposed resolution of the matter best serves investors and the SEC’s mission.

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