SEC Gag Orders are Against Public Policy

Summary of the Argument

The SEC’s prohibition against settling defendants criticizing the SEC’s unproven allegations raises important First Amendment and Due Process Clause issues, as noted by the Petitioner. Amici raise a complementary consideration warranting review: there is no compelling public policy reason to enforce SEC “gag orders” against defendants who settle with the SEC. In fact, the opposite is true. In the statutes and regulations the SEC is responsible for enforcing (and by its own actions, public statements, and admissions), the SEC requires full transparency and disclosure for the benefit of participants in securities markets. There is no compelling justification for the SEC to break from this responsibility and single out for concealment and opacity information from defendants who settle with the SEC. To the contrary, preventing these settling defendants from speaking freely deprives the securities markets of potentially material information and so may harm the very market participants for whose benefit the SEC pursues transparency and disclosure. These important additional considerations weigh in favor of granting the petition.

Source: SEC Gag Orders are Against Public Policy (Summary of Amicus Brief in Barry D. Romeril v. Securities and Exchange Commission)