Can I Appeal an SEC Settlement?
How to Challenge Consent Judgments and “Settlements in Principle” with Aggressive SEC Defense
If you’re facing the SEC, you already know how exhausted and overwhelmed you feel. By the time the SEC finally offers a “settlement,” you may not even realize you’ve signed away your last chance at fighting back, or that the penalties are sometimes worse than the original investigation. Many defendants later discover they’ve agreed to permanent industry bars, crippling penalties, and long-term reputational destruction they can’t reverse, all because they didn’t realize how settlement “acceptance” and “appeal” work in the SEC’s world.
This is why we wrote this page: to show you exactly how the SEC’s settlement process destroys the legal defenses you thought you had, traps you in procedural deadlines you didn’t see coming, and leaves you with almost no way to challenge the outcome unless you act immediately.
If you recently signed an SEC settlement or are facing a consent judgment after a long investigation, you must understand how the agency’s “settlement” process operates completely differently from what most lawyers and defendants expect:
- SEC settlements are voluntary agreements that typically waive the right to appeal, trapping defendants in outcomes they often discover too late (SEC Enforcement Manual, Section 6.1)
- Consent judgments in federal court usually require the defendant to accept the terms without admitting or denying wrongdoing, making it nearly impossible to challenge the underlying facts later (SEC v. Citigroup Global Markets Inc., 2014)
- The agency aggressively enforces settlement terms through post-judgment sanctions, including permanent injunctions, industry bars, and multi-million-dollar disgorgements (SEC Administrative Proceedings Release No. 87700)
- Most defendants do not realize that the “appeal” process they’re familiar with from other litigation does not apply to settlements or consent judgments
- The only viable way to challenge a settlement is to act within the narrow acceptance window—typically 30 days or less—before the settlement becomes effective (SEC Enforcement Manual, Section 5.2)
- Waiting until after the settlement is finalized usually results in the court or the Commission deciding that the defendant waived their right to appeal by agreeing to the terms
The SEC’s settlement process is designed to leave defendants with no real options once they’ve accepted the offer. The paperwork you sign almost always includes language waiving your appeal rights and accepting the agency’s findings, often without fully understanding the long-term consequences.
You must act before you sign anything. If you are already in “settlement negotiations” or have been told you need to accept a “settlement in principle,” you must contact a qualified SEC defense attorney immediately. Once you sign a consent agreement, your options are nearly eliminated.
If you are one of the few defendants who has not yet signed a settlement or consent judgment, you still have time to challenge the SEC’s findings, negotiate more favorable terms, or pursue an alternative resolution that protects your reputation, career, and financial future. But you must act now.
The SEC’s “Settlement” Process: What Most Defendants Don’t Understand
The SEC’s settlement process is not what most defendants expect. Unlike a typical settlement in civil litigation, where parties negotiate terms and both sides agree to resolve the dispute, an SEC settlement is a voluntary agreement in which the defendant typically waives their right to appeal and accepts the agency’s findings.
“A settlement is a negotiated resolution of a pending matter. Settlements are ‘voluntary’ agreements, as both parties must consent to the terms of the settlement.”
— SEC Enforcement Manual, Section 6.1
This means that once you agree to the terms of the settlement, you are bound by those terms, and you have no right to appeal. The settlement agreement typically includes language waiving your appeal rights and accepting the agency’s findings.
The SEC uses two primary types of settlements: administrative proceedings and civil actions in federal court.
Administrative Proceedings
In an administrative proceeding, the SEC files an “Order Instituting Proceedings” (OIP) and serves it on the respondent. The respondent then has 30 days to file an answer. The proceeding is typically resolved by a settlement agreement between the respondent and the SEC’s Division of Enforcement.
The settlement agreement, known as an “Offer of Settlement,” includes language waiving the respondent’s right to appeal and accepting the agency’s findings. Once the settlement is approved by the Commission, it becomes final.
Civil Actions in Federal Court
In a civil action in federal court, the SEC files a complaint and serves it on the defendant. The defendant then has 21 days to file an answer. The case is typically resolved by a consent judgment, which the defendant signs, waiving their right to appeal and accepting the agency’s findings.
The consent judgment typically includes language waiving the defendant’s right to appeal and accepting the agency’s findings. Once the consent judgment is approved by the court, it becomes final.
The Consequences of Signing an SEC Settlement
The consequences of signing an SEC settlement can be severe and long-lasting. The settlement typically includes the following terms:
1. Injunctions
The settlement typically includes an injunction, which prohibits the defendant from violating the securities laws in the future. The injunction may also prohibit the defendant from serving as an officer or director of a public company or from participating in the securities industry in any capacity.
2. Disgorgement
The settlement typically includes an order requiring the defendant to disgorge any ill-gotten gains from the alleged misconduct. Disgorgement is the repayment of profits obtained through the violation of the securities laws.
3. Civil Penalties
The settlement typically includes an order requiring the defendant to pay a civil penalty. Civil penalties are monetary fines imposed by the SEC for violating the securities laws.
4. Industry Bars
The settlement typically includes an order prohibiting the defendant from serving as an officer or director of a public company or from participating in the securities industry in any capacity. This can effectively end the defendant’s career in the securities industry.
5. Reputational Damage
The settlement typically includes an order requiring the defendant to publicly disclose the settlement and its terms. This can result in significant reputational damage and harm the defendant’s business and career.
The Appeal Process: What You Need to Know
The appeal process for SEC settlements and consent judgments is not what most defendants expect. Once you sign a settlement or consent judgment, you typically waive your right to appeal. However, there are limited circumstances in which you may be able to challenge the settlement or consent judgment.
1. Motion to Vacate
A motion to vacate is a legal motion asking the court to set aside the settlement or consent judgment. To succeed on a motion to vacate, you must show that the settlement or consent judgment was entered into as a result of fraud, mistake, or duress.
2. Motion to Modify
A motion to modify is a legal motion asking the court to modify the terms of the settlement or consent judgment. To succeed on a motion to modify, you must show that there has been a material change in circumstances since the settlement or consent judgment was entered into.
3. Appeal to the Full Commission
In an administrative proceeding, you may be able to appeal the initial decision of the administrative law judge (ALJ) to the full Commission. The appeal must be filed within 21 days of the ALJ’s initial decision.
4. Appeal to the Court of Appeals
In a civil action in federal court, you may be able to appeal the consent judgment to the court of appeals. The appeal must be filed within 30 days of the entry of the consent judgment.
How Spodek Law Group Can Help
At Spodek Law Group, our legal team has extensive experience helping clients navigate the complex process of appealing an SEC settlement or consent judgment. We understand the nuances of the SEC’s enforcement process and can help you protect your rights, reputation, and future.
1. Review the Settlement Agreement
We can review the settlement agreement to determine whether you have waived your right to appeal and whether there are any grounds for challenging the settlement.
2. Evaluate Your Options
We can evaluate your options and advise you on the best course of action. This may include filing a motion to vacate, a motion to modify, or an appeal to the full Commission or the court of appeals.
3. Prepare Your Appeal
We can prepare your appeal and file it with the appropriate court or the full Commission. We will work tirelessly to protect your rights and achieve the best possible outcome for your case.
4. Negotiate a More Favorable Settlement
We can negotiate a more favorable settlement with the SEC, reducing the penalties and protecting your reputation and future.
5. Defend You in Court
We can defend you in court and fight for your rights, reputation, and future. Our legal team has a proven track record of success in defending clients against SEC enforcement actions.
Frequently Asked Questions (FAQs)
1. Can I appeal an SEC settlement?
Once you sign an SEC settlement, you typically waive your right to appeal. However, there are limited circumstances in which you may be able to challenge the settlement, such as filing a motion to vacate or a motion to modify.
2. Can I appeal a consent judgment?
Once you sign a consent judgment, you typically waive your right to appeal. However, there are limited circumstances in which you may be able to challenge the consent judgment, such as filing a motion to vacate or a motion to modify.
3. What is a motion to vacate?
A motion to vacate is a legal motion asking the court to set aside a settlement or consent judgment. To succeed on a motion to vacate, you must show that the settlement or consent judgment was entered into as a result of fraud, mistake, or duress.
4. What is a motion to modify?
A motion to modify is a legal motion asking the court to modify the terms of a settlement or consent judgment. To succeed on a motion to modify, you must show that there has been a material change in circumstances since the settlement or consent judgment was entered into.
5. What is the difference between an administrative proceeding and a civil action in federal court?
In an administrative proceeding, the SEC files an “Order Instituting Proceedings” (OIP) and serves it on the respondent. The respondent then has 30 days to file an answer. The proceeding is typically resolved by a settlement agreement between the respondent and the SEC’s Division of Enforcement. In a civil action in federal court, the SEC files a complaint and serves it on the defendant. The defendant then has 21 days to file an answer. The case is typically resolved by a consent judgment, which the defendant signs, waiving their right to appeal and accepting the agency’s findings.
6. What are the consequences of signing an SEC settlement?
The consequences of signing an SEC settlement can be severe and long-lasting. The settlement typically includes injunctions, disgorgement, civil penalties, industry bars, and reputational damage.
7. Why should I hire Spodek Law Group to handle my SEC defense?
At Spodek Law Group, our legal team has the experience to help you navigate the complex process of appealing an SEC settlement or consent judgment. We understand the nuances of the SEC’s enforcement process and can help you protect your rights, reputation, and future.
