US Federal Judge in New York Criticizes SEC ‘Gag Orders’ Policy – Reuters

A US federal judge in New York on Friday called it “troubling” that a Securities and Exchange Commission (SEC) policy makes people who settle charges of fraud, insider trading or other agree not to deny them later.

Under the decades-old policy, defendants who settle without admitting to must agree not to publicly deny them. The practice, a standard in SEC settlements, has been upheld in courts despite drawing ire from critics including former defendants, the libertarian Cato Institute and other groups that favor limiting government power.

US District Judge Ronnie Abrams took said in a ruling that required “gag orders” clashes with the constitutional protection of free speech. “What is the SEC so afraid of? Any criticism, apparently—or, rather, anything that may even ‘create the impression’ of criticism—of that governmental agency,” Abrams wrote.

The judge nevertheless approved a settlement with a no-deny clause, following a ruling last year by the 2nd US Circuit Court of Appeals which said the practice was not unconstitutional.

Source: US Federal Judge in New York Criticizes SEC ‘Gag Orders’ Policy – Reuters