On Tuesday, as you probably heard, Facebook reached a settlement with the Federal Trade Commission to resolve allegations that it deceived users about how it used their personal information. Facebook CEO Mark Zuckerberg said publicly that "we made a bunch of mistakes." But you won't find any such admission in Facebook's proposed settlement agreement with the FTC. In that document, Facebook "expressly denies the allegations set forth in the [FTC] complaint."

There's a similar denial of wrongdoing from Merck, which last week reached a $950 million resolution of the Justice Department's civil and criminal allegations that it falsely marketed the painkiller Vioxx. Even though Merck pled guilty to a misdemeanor violation for off-label marketing and agreed to pay a $322 million criminal penalty, the company said it wasn't admitting liability or wrongdoing in the civil portion of the DOJ settlement, for which it agreed to pony up $628 million.

Over at the Commodity Futures Trading Commission, meanwhile, regulators obtained a $24 million settlement in early November with a North Carolina company called Queen Shoals. But if you check out the Queen Shoals consent order entered by a North Carolina federal judge, you'll see that the defendants "neither admit nor deny" the CFTC's allegations. And in the Federal Depositors Insurance Corporation's most recently disclosed enforcement agreement, an October 20 settlement with the First Community Bank of Santa Rosa, Calif., the bank resolved allegations "without admitting or denying any [FDIC] charges of unsafe or unsound banking practices."

I could go on, citing DOJ Antitrust Division consent decrees, Environmental Protection Agency settlements with polluters, Food and Drug Administration enforcement deals, but you get the idea: Government agencies routinely reach civil settlements that permit corporate defendants to resolve allegations without actually admitting they did anything wrong. Such concessions by the government are the grease that keeps the wheels of civil enforcement turning. Defendants agree to pay penalties and change their behavior as long as they don't have to make admissions that could hamper their defense in related private litigation.

That's why the Securities and Exchange Commission was so peeved by Senior U.S. District Judge Jed Rakoff's ruling Monday, which holds that the SEC's boilerplate "neither admit nor deny" settlement language obscures the truth of the agency's allegations. Rakoff held that it's not fair, reasonable, or in the public's interest for him to approve a settlement without knowing the "cold, hard, solid facts, established either by admission or by trials." SEC Enforcement Director Robert Khuzami, in an unusually heated response, said in a statement that Rakoff's ruling "ignores decades of established practice throughout federal agencies and decisions of the federal courts."

As Khuzami noted -- and as Andrew Longstreth has reported for On the Case -- there are consequences to demanding admissions of wrongdoing from defendants. Going to trial against recalcitrant corporations takes resources that would otherwise go to enforcement actions against other allegedly wayward businesses. Khuzami (and Longstreth) focused only on the costs to the SEC, but if other federal judges adopted Rakoff's standard, the ripples would extend across the pool of government enforcement. There's no good reason, after all, to distinguish between the SEC and the other government agencies that make similar compromises in settlement deals.

Imagine the impact. These days it's news when a judge questions a government agency's civil settlement (see, for instance, this Reuters report on U.S. District Judge Emmett Sullivan criticizing a deal in which Barclays resolved allegations of violating trade sanctions). If judges begin rejecting regulatory agreements in which defendants don't concede liability, all hell will break loose. The enforcement system as we know it simply wouldn't function. But maybe it's time for a little regulatory paradigm shifting. Kevin LaCroix at the D&O Diary read Rakoff's ruling to require only that Citi agree to the non-admission admission the SEC extracted from Goldman Sachs last year when Goldman agreed a $535 settlement of similar allegations that it misled investors about a designed-to-fail collateralized debt obligation. Rakoff said the SEC's agreement with Goldman contained an "express admission" from the bank, but really, Goldman only "acknowledged" that its marketing materials for the CDO "contained incomplete information," and called the omission "a mistake" that it "regrets." The language is careful; Goldman didn't actually concede illegal or even improper conduct, which limits the impact of the admission in private litigation. Can Citi -- and other corporate defendants -- live with acknowledging mistakes, as long as those mistakes don't specifically amount to illegality? Rakoff has challenged regulators and his fellow judges to find that out.

(Reporting by Alison Frankel)