In his remarks at SEC Speaks 2021 on October 13, 2021, the Securities and Exchange Commission’s (“SEC”)’s new Director of Enforcement, Gurbir Grewal, discussed the waning public trust in “our financial markets” and the “near historic lows” of confidence in banks, technology companies, and big business and the SEC’s plan to combat this trend.[1] In particular, Grewal presented three areas of focus for the SEC in this effort:

  1. corporate responsibility,
  2. gatekeeper accountability, and
  3. appropriate remedies, particularly prophylactic ones.[2]

The first two areas of focus require stakeholder buy-in. Corporate responsibility, Grewal emphasized, mandates companies to implement sufficient controls and ensure compliance, but “too often” companies are “practically inviting fraud or waiting for misconduct.”  Gatekeepers—like attorneys or audit partners—are essential and must encourage their clients to follow the rules.

While the first two factors do not represent a shift in existing SEC policy, the final area of focus does. In his remarks about seeking to enforce “appropriate remedies,” Grewal recommended the SEC take an “aggressive” stance on the use of available remedies to deter wrongdoing.

The first available remedy discussed included admissions of wrongdoing. The return to a policy of seeking admissions in certain settlements represents a significant shift in SEC policy. While requiring admissions has long been the exception in SEC practice, in 2012, Robert Khuzami, then Director of the SEC’s Division of Enforcement, sought to increase the use of this remedy in cases involving parallel criminal conduct or non-prosecution or deferred prosecution agreements admitting to criminal conduct.[3]  Through 2016, however, only roughly 2% of SEC settlements included admissions of wrongdoing.[4]  This low number was still an increase over historic SEC numbers. According to former SEC Chair Mary Jo White, the SEC had previously “settled virtually all of its cases on a no-admit-no deny basis.”[5] A “no-admit-no-deny” settlement allows the SEC to impose penalties on a party without that party admitting or denying the alleged conduct. The SEC under Chairman Jay Clayton essentially returned to this policy in order to promote efficiency in reaching resolutions without drawn-out proceedings that strain SEC resources.[6]

In the face of diminishing public trust, however, Grewal states that the SEC will once again seek admissions of wrongdoing. Grewal explained that “[w]hen it comes to accountability, few things rival the magnitude of wrongdoers admitting that they broke the law.”[7] He went on to state that the SEC will “in appropriate circumstances, be requiring admissions in cases where heightened accountability and acceptance of responsibility are in the public interest. Admissions, given their attention-getting nature, also serve as a clarion call to other market participants to stamp out and self-report the misconduct to the extent it is occurring in their firm.”[8] Deputy Director of Enforcement Sanjay Wadhwa clarified that the “appropriate circumstances” in which the SEC would seek admissions would involve “egregious misconduct” by which a large number of investors were harmed or where an SEC investigation was obstructed.[9]

This policy could have far-reaching implications for individuals and companies that are subjects of an SEC investigation. Not only will an admission of wrongdoing lead to reputational and business damages, it provides exposure to private civil suits and leverage to any potential plaintiffs. Accordingly, many companies and individuals may choose to litigate with the SEC to avoid admissions in a settlement. It is important to note, however, that this policy is reminiscent of the Obama-era policy which led to only a small increase in settlements involving an admission of wrongdoing. While Grewal promises that the SEC will be taking an “aggressive” stance on remedies, it is too early to tell whether he plans to go above and beyond the efforts of the Obama administration.

The second remedy Grewal discussed included the imposition of officer and director bars in cases involving scienter-based violations. Grewal stated that this is a critical tool, not only against current officers or directors of public companies, but also against an “individual [who] is likely to have an opportunity to become an officer or director of a public company in the future.[10]  Grewal concluded: “if there is egregious conduct and a chance the person could have the opportunity to serve at the highest levels of a public company, we may well seek an officer and director bar to keep that person from being in a position to harm investors again.”[11]

Another available remedy Grewal emphasized was the importance of conduct based injunctions, enjoining a defendant from engaging in specific conduct in the future (i.e., an injunction against preparing opinion letters for five years). Undertakings were another remedy Grewal mentioned available to the SEC and which should be used to require a settling party to address the conduct underlying the violation, including the requirement to hire an independent compliance consultant.[12]

Finally, while emphasizing the importance of the process, Grewal discussed ways to make the Wells process “more streamlined and efficient,” specifically in regards to Wells meetings.[13]  If the SEC plans to bring an enforcement action against an individual or a company, they will first send a formal letter called a Wells notice to inform them. In the past, the director of enforcement or his or her deputy would then allow defense counsel an opportunity to meet to negotiate a settlement for fewer claims or to attempt to convince the SEC not to pursue any claims at all. Grewal announced that he and Deputy Director Wadhwa would not attend all Wells meetings and that, in fact, defendants should not expect a Wells meeting in every case at all. Grewal added that cases that “present novel legal and factual questions, or raise significant programmatic issues” will require a Wells meeting with him or Deputy Director Wadhwa in attendance, but that there are not many of such cases. He and Deputy Director Wadhwa will continue to review and evaluate all Wells submissions regardless of whether they warrant a meeting.[14]

Grewal’s remarks on the Wells process does not offer much insight into who can expect a Wells meeting and for what reasons. It does, however, show an increase in decision-making responsibilities for SEC staff. In decentralizing the Wells process, it will likely be more difficult for attorneys to predict the outcome of Wells meetings.

These policy changes offer some uncertainty around SEC enforcement actions. However, the impact of these remarks remains to be seen.

[1] Gurbir Grewal, Director, Division of Enforcement, Remarks at SEC Speaks 2021 (Oct. 13, 2021),

[2] Id.

[3] Robert Khuzami, Director of the SEC’s Division of Enforcement, Public Statement (Jan. 7, 2012),

[4] David Rosenfeld, Admissions in SEC Enforcement Cases: The Revolution That Wasn’t,  103 Iowa L. Rev. 113 (2017),

[5] Mary Jo White, Deploying the Full Enforcement Arsenal, Council of Institutional Investors Fall Conference in Chicago, IL (Sept. 26, 2013),

[6] Giovanni Patti & Peter Robau, Admissions of Guilt to the SEC under Chair Jay Clayton, Program on Corporate Compliance and Enforcement at New York University School of Law (Jan. 19, 2021),

[7] Gurbir Grewal, Director, Division of Enforcement, Remarks at SEC Speaks 2021 (Oct. 13, 2021),

[8] Id.

[9] Dave Michaels, Wall Street, Companies May Have to Give Up More to Settle With SEC, Wall St. J. (Oct. 12, 2021),

[10] Gurbir Grewal, Director, Division of Enforcement, Remarks at SEC Speaks 2021 (Oct. 13, 2021),

[11] Id.

[12] Id.

[13] Id.

[14] Id.