When your thoughts turn to helplessness regarding the corporate control of government and the dissolution of the rule of law, think about what one motivated federal judge can do. Judge Jed Rakoff’s ruling blocking an SEC settlement with Citigroup over mortgage backed securities misrepresentations has had major ripple effects (and not just with Matt Taibbi). Of particular interest to many was the SEC’s peculiar wording in almost all of their financial fraud cases, allowing the settlement partner to “neither admit or deny” wrongdoing. This limits the exposure of the offending party in other civil and criminal suits. It was the part that Rakoff objected to the most.

And this had an immediate impact. First, it opened up Citi to multiple additional lawsuits. Next, other judges began to ignore the SEC boilerplate about neither admitting or denying wrongdoing. In a decision in New York state appeals court, a judge wrote that “Read as a whole, the offer of settlement, the SEC Order … and related documents are not reasonably susceptible to any interpretation other than that Bear Stearns knowingly and intentionally facilitated illegal late trading for preferred customers, and that the relief provisions of the SEC Order required disgorgement of funds gained through that illegal activity.” What’s more, the House of Representatives saw its window and scheduled a hearing on the no-fault settlement practice.

Now we get the final result of all this: the SEC plans to drop the boilerplate.

The Securities and Exchange Commission is making a major change in how it settles some securities fraud cases, telling companies that they will no longer be allowed to say they neither admit nor deny the commission’s civil charges when, at the same time, they admit to or have been convicted of criminal violations.

The change has been under consideration for some time and could be announced soon, according to people who have been briefed on the new policy.

The S.E.C. will continue to use the “neither admit nor deny” settlement process when it alone reaches a deal with a company in a case of civil securities law violations, the people briefed on the policy said. Those types of cases make up the majority of its settlements.

The S.E.C. has been sharply criticized, in federal court and on Capitol Hill, for allowing companies to repeatedly settle fraud cases without admitting or denying the charges. That policy has been allowed to continue in cases even when a company admits the same conduct to another government agency, often the Justice Department.

Now, because the SEC reserves the right to use “neither admit or deny” in singled-source civil securities violations, this may have little impact in the near term. But the jig is up. First of all, the cases where only the SEC reaches a settlement on these kinds of violations are becoming rarer and rarer. Second, appeals courts are blowing off the language, relieving it of any effectiveness as a shield for the financial institutions involved. A Wachovia settlement last month over bid rigging included the line that Wachovia “admits, acknowledges and accepts responsibility for” their crimes.

This is a first step to stopping this travesty of allowing companies to get off the hook and pay their way out of fraud violations without even admitting they did anything wrong. And this never happens without the work of Jed Rakoff.