LIABILITY AND ADMISSIONS OF WRONGDOING IN PUBLIC ENFORCEMENT OF LAW.

Some judges and scholars have questioned the social value of the standard form in which the Securities and Exchange Commission settles its corporate enforcement actions, including the agency's use of essentially unreviewed consent decrees that include no admission of liability or wrongdoing. This essay, for a symposium on SEC enforcement, provides an analysis of the deterrent effects of the three main components of settlements in public enforcement of law: liability, admission, and remedy. The conclusions are the following. All three components can have beneficial deterrent effects. Cost considerations nonetheless justify some settlements that dispense with liability or admission, or even both. But a practice of uniformly institutionalizing settlements without admissions, such that the deterrent effects of admissions are never realized, even for bargaining leverage, is not justified. Further, there is reason to believe that some form of judicial review of enforcement settlements would contribute to deterrence. To put the argument another way, agencies engaged in public civil enforcement could learn something from contemplating why the federal criminal justice system strongly disfavors nolo contendere pleas and why a plea bargaining system dominated by nolo pleas would be so undesirable as to be unthinkable. [ABSTRACT FROM AUTHOR]

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