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AGAINST: Neither admit nor deny

Honorable Judge Jed S. Rakoff | September 6, 2017

A lawsuit begins by a plaintiff filing a “Complaint,” which largely consists of unproven allegations. The defendant responds with an “Answer” that typically denies the truth of most material allegations. Since most lawsuits involve private disputes, no one besides the parties much cares if the case subsequently settles without the allegations being proved or disproved. But when a federal administrative agency like the Securities and Exchange Commission not only brings a lawsuit alleging significant fraud, but also deems the lawsuit sufficiently important to file it in federal court, the public is alerted that very serious misconduct is being alleged. The public thus has an obvious interest in knowing whether such serious allegations made by a government agency are true or untrue. The SEC’s policy of allowing such federal lawsuits to be settled without the defendant admitting or denying the truth of the allegations thereby directly deprives the public of both transparency and...

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