I. Policy Announcement 

On September 26, 2025, Chairman Paul Atkins of the US Securities and Exchange Commission (the SEC or the Commission) announced a change in the SEC’s policy regarding how the Commission will consider requests for waivers of certain automatic disqualifications in the context of negotiated settlements.¹ Chairman Atkins explained that regulated entities seeking a negotiated settlement of an enforcement action may now seek simultaneous consideration by the Commission of the entity’s offer of settlement and request for a waiver.² The Chairman has directed that if the Commission approves a settlement offer but not the waiver request, the Commission staff should inform the firm promptly of the Commission’s decision. The firm will then have a short period of time, usually up to five business days, to notify the staff whether the firm agrees to move forward with the settlement absent a waiver, or withdraws the offer of settlement.³ A firm that withdraws its settlement offer could submit an updated settlement offer or may face a litigated proceeding. 

Chairman Atkins highlighted that the policy change “promotes fairness and economy of Commission resources” and advances the Commission’s “three-part mission to protect investors; facilitate capital formation; and maintain fair, orderly, and efficient markets.”⁴ The change in policy advances these interests by allowing the Commission to consider the settlement offer and waiver in the full context of the facts, conduct, and policy considerations, with the goal of reaching more comprehensive settlements. The policy enhances efficiency within the Commission.⁵ It also provides certainty for public companies and SEC registrants, which could suffer significant business impacts if their waiver requests were not granted and which often consider the availability of a waiver as a material component in a negotiated resolution.

The policy is broadly applicable to requests for waivers from (1) disqualification from acting as a well-known seasoned issuer (WKSI) under Rule 405 of the Securities Act of 1933 (the Securities Act); (2) disqualification from utilizing statutory safe harbors for forward-looking statements under the Private Securities Litigation Reform Act of 1995; (3) disqualification from leveraging private offering exemptions under Regulation A, Regulation D, and Regulation Crowdfunding, under the Securities Act; (4) disqualification from using the registration exemption under the Securities Act and Regulation E for securities issued by certain small-business investment companies and business development companies; and (5) disqualification from the ability to act or serve in certain capacities pursuant to Section 9(a) of the Investment Company Act.

II. Historical Context

This policy announcement marks a return to the policy adopted in 2019 by then-SEC Chairman Jay Clayton, which was in turn based on a practice during some points in the Commission’s history when firms could submit a settlement offer contingent upon receiving a waiver.⁶ The review process is largely the same whether or not settlement offers and waiver requests are considered together. Each document is prepared and considered contemporaneously by different staff within the Commission. Enforcement staff evaluate the settlement offer, while Corporation Finance or Investment Management staff assess the waiver application. The crucial difference is that when the Commission considered and voted on settlement offers and waiver requests separately, there was no required process by which a party would be notified that the Commission did not approve its waiver request, and thus no required opportunity to withdraw its settlement offer. Separate consideration of settlement offers and waivers created an environment of less certainty for settling firms, which could impact the likelihood and timing of reaching a negotiated resolution.

III. Analysis and Implications for Financial Firms and Public Companies

The Commission’s policy update is beneficial for financial institutions, broker-dealers, and public companies negotiating a settlement with the SEC, as well as for investors. The process does not change the criteria by which the Commission evaluates waiver requests. However, the increase in flexibility and certainty for firms incentivizes firms and companies to propose settlements, knowing that if an entity’s waiver request is denied, the entity can choose to withdraw its settlement offer. 

We believe these changes to the Commission’s processes will benefit all stakeholders. The impacts of certain disqualifications can be material for public companies and SEC registrants. Further, these impacts can far outweigh the negotiated dollar value of the settlement and may impact activities that have no connection to the underlying misconduct. Providing these firms with more certainty regarding the availability of a waiver can streamline and expedite the settlement process, and quicker resolutions of Commission investigations will also potentially benefit investors if impacted shareholders receive compensation more quickly.