Publication
The SEC Returns to Concurrent Consideration of Settlements and Waiver Requests
Key Takeaway
Securities and Exchange Commission (SEC) Chairman Paul Atkins has restored the practice of considering settlement offers and collateral consequence waiver requests simultaneously. This procedural change reduces settlement risk for prospective respondents by allowing them to evaluate consequences before agreeing to a settlement.
The Change: Concurrent Consideration
On September 26, 2025, SEC Chairman Paul Atkins announced that the Commission will once again consider settlement offers in tandem with requests for waivers from collateral consequences that flow from settled enforcement actions. This marks a return to the process adopted in 2019 by then-Chairman Jay Clayton and subsequently reversed in 2021 under then-Acting Chair Allison Herren Lee, who required that waiver requests be evaluated only after the Commission had voted on the underlying settlement.
The change is not trivial. Under the prior framework, respondents were required to resolve an enforcement action first, with no certainty that the Commission would subsequently grant the waiver necessary to avoid adverse collateral consequences. That sequencing effectively gave the Enforcement staff enhanced leverage in certain settlement negotiations because prospective respondents faced the risk of agreeing to settlement terms while confronting uncertainty about whether staff in the Division of Corporation Finance or the Division of Investment Management would grant requested waivers. For businesses whose continued operations might depend on such waivers, this potentially meant settling without the ability to assess the full consequences of doing so.
Chairman Atkins’ announcement restores the pre-2021 practice, aligning settlement consideration with waiver evaluation. Respondents can now evaluate the complete package of consequences before deciding whether to settle. Notably, if the Commission is inclined to accept a settlement proposal but denies a simultaneous waiver request, the potential respondent will be able to consider whether to proceed with a settlement without a waiver, or pursue litigation.
This procedural change does not alter the Commission’s substantive standards for granting waivers, but it materially reduces settlement risk in some situations by restoring predictability and a more balanced negotiation dynamic. Parties now have visibility into both the enforcement and waiver outcomes simultaneously, allowing them to make fully informed decisions about whether to accept proposed settlement terms.
The Stakes: Understanding Collateral Consequences
Many regulated entities — investment advisers, broker-dealers, underwriters, and public companies — depend on SEC-granted waivers to preserve market access and maintain critical business functions following settled enforcement actions. The federal securities laws impose a range of automatic disqualifications when a firm or individual becomes the subject of certain SEC enforcement orders:
- Well-Known Seasoned Issuer (WKSI) Status: A Commission order can strip a public company of WKSI eligibility, limiting its ability to use short-form registration statements and conduct streamlined capital raising. Waivers allow otherwise qualifying companies to retain WKSI status despite an enforcement settlement.
- Rule 506 of Regulation D: Disqualifying events bar issuers from relying on the most commonly used private placement exemption. This can impede fundraising for operating companies, funds, and other issuers. The Commission regularly considers waiver requests so issuers can continue to raise capital under Rule 506 despite a settlement.
- Investment Company Act and Investment Advisers Act Disqualifications: Orders can prohibit firms and individuals from serving as investment advisers or directors of registered funds, a consequence that can effectively end or radically alter a business. Waivers are often essential for fund sponsors and advisers facing enforcement actions.
- Other Collateral Consequences: Various rules and statutory provisions impose additional consequences — such as loss of PSLRA safe harbor protection for forward-looking statements, restrictions under the Exchange Act for broker-dealers, loss of exemptions under Regulations A and Crowdfunding, or restrictions under the Securities Act for underwriters — triggered automatically by certain SEC orders.
For companies and individuals navigating SEC investigations, the announced shift reduces uncertainty and makes negotiated resolutions more predictable. While the Commission will continue to scrutinize waiver requests carefully — and parties should expect no diminution in the substantive standards applied to waiver applications — respondents regain the ability to weigh settlement terms and collateral relief simultaneously. This is a practical recalibration with meaningful implications for market participants confronting SEC enforcement risk.
About Snell & Wilmer
Founded in 1938, Snell & Wilmer is a full-service business law firm with more than 500 attorneys practicing in 17 locations throughout the United States and in Mexico, including Los Angeles, Orange County, Palo Alto and San Diego, California; Phoenix and Tucson, Arizona; Denver, Colorado; Washington, D.C.; Boise, Idaho; Las Vegas and Reno-Tahoe, Nevada; Albuquerque, New Mexico; Portland, Oregon; Dallas, Texas; Salt Lake City, Utah; Seattle, Washington; and Los Cabos, Mexico. The firm represents clients ranging from large, publicly traded corporations to small businesses, individuals and entrepreneurs. For more information, visit swlaw.com.
