The Securities and Exchange Commission will strip off the option to “neither admit nor deny” for companies that admit to criminal wrongdoing in securities fraud cases only. The Commission said the changes were made last week after discussions between senior enforcement staff and the Commissioners.

According to a statement from SEC enforcement director Robert Khuzaimi, the new policy is only meant to eliminate language that may be construed as inconsistent with admissions that wrongdoers have already made in the criminal cases. For settlement in civil securities law violations, the agency will continue to use the “neither admit nor deny” settlement process.

The policy change eliminates what had been a strange feature of parallel criminal and civil proceedings. Even when companies admitted to broad criminal violations in settlements with the Justice Department, a greater offense compared to civil charges, they were not required to make an admission in their settlements with the SEC.

In its statement, the Commissioner pointed out that the policy change was separate from- and unrelated to- its ongoing battle with U.S. District Judge Jed Rakoff over the agency's proposed settlement with Citigroup. Rakoff rejected the $285 million settlement, criticizing the SEC's practice of entering into settlements with companies in which they neither admit nor deny wrongdoing. The SEC has appealed Rakoff's ruling.

Judge Rakoff had made it abundantly clear in his prior orders in the Bank of America case and the more recent Vitesse case that he was not a believer in the SEC's practice of not requiring defendants to admit any wrongdoing, and he indicated that the next time he was presented with such a settlement he would address the "substantial questions of whether the Court can approve other settlements that involve the practice of “neither admitting nor denying.”