What Is the SEC Hiding?
The U.S. Court of Appeals for the 9th Circuit will hear oral arguments regarding the Securities and Exchange Commission’s (SEC) gag rule on Thursday. The rule flagrantly violates the First Amendment by prohibiting all defendants who settle with the SEC from publicly pleading their innocence in perpetuity.
Thomas Powell alleges that he was the victim of a high-pressure settlement process after being charged by the SEC: “I refused the settlement verbiage and specifically the gag order numerous times, but the SEC denied my requests and exerted time pressure, indicating that if I did not sign, they would take further enforcement action,” he declared to the Court. In Powell v. SEC, petitioners ask the Court to vacate the SEC’s denial of an earlier petition and order the Commission to remove the language imposing the gag from the rule.
Evaluating the SEC’s complaints against Powell is impossible due to the gag rule. After alluding to the SEC’s allegations against him, Powell’s very next words are: “to which I can neither admit nor deny.” The public is unable to judge for itself whether the SEC’s actions against Powell are meritorious or meretricious, a waste of taxpayer dollars or responsible stewardship thereof, a reason to respect the agency or cause for outrage at executive overreach thanks to the gag rule.
The rule prohibits defendants who settle with the agency from ever publicly disputing the factual basis of the complaints made against them with its inclusion of a no-admit/no-deny policy. If that sounds unlawful, it’s because it is. Margaret Little, counsel of record in Powell v. SEC for the New Civil Liberties Alliance (NCLA), a petitioner in the case, originally petitioned the SEC in October 2018 to remove the no-admit/no-deny language of the rule that unconstitutionally constrains defendants’ speech. Little explains how the rule as written violates the First Amendment in no fewer than seven ways.
First, the gag rule imposes a prior restraint on speech by granting the SEC “unbridled discretion” over what speech defendants may engage in. Second, it does so for the rest of the defendant’s life, constituting “perpetually mandated silence.” Third, the rule regulates content both by penalizing defendants for articulating certain views about the details of the SEC complaint against them as well as for creating “an impression of a forbidden view of the complaint” in others. Fourth, the rule demonstrates its “raw unconstitutionality
Article from Reason.com
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