Sixteen Amici Submit Powerful Briefs Defending First Amendment Rights Against SEC’s Illegal Gag Rule
2024年6月27日 - 10:00PM
Research organizations, advocacy groups and law firms have filed 11
amici curiae briefs in support the New Civil Liberties Alliance’s
Powell, et al. v. SEC lawsuit in the U.S. Court of Appeals for the
Ninth Circuit, challenging SEC’s refusal to amend its “Gag Rule.”
This 50-year-old rule forbids every American who settles a
regulatory enforcement case with SEC from even truthfully
criticizing their cases in public for the rest of their lives.
Representing Petitioners Thomas Powell, Cassandra Toroian, Gary
Pryor, Joseph Collins, Michelle Silverstein, Rex Scates, Ray Lucia,
Barry Romeril, Christopher Novinger, the Reason Foundation, and the
Cape Gazette, NCLA thanks amici for demanding the Gag
Rule’s downfall in defense of core civil liberties.
Excerpts of the briefs filed by amici curiae in
support of Petitioners follow:
“[A]llowing ‘an agency of the federal government
to shield itself from public view’ … is the same motivation that
underlay de scandalis magnutum laws in the Middle Ages, and later
sedition laws, … used to silence criticism and promote only a
favorable public perception [of government] regardless of truth. …
Compelling or silencing speech to burnish agency reputation is not
a legitimate function of government.”— Americans for
Prosperity Foundation, Foundation for Individual Rights and
Expression, and Freedom of the Press Foundation
“This vague gag on the accused’s speech …
prevents the public from being ‘their own governors’ … SEC keeps as
much of its enforcement activity out of the public eye as possible.
The SEC has power and perverse incentives, and it largely operates
in secrecy—the perfect trifecta for a threat to civil liberty. …
The SEC believes it has the right to prevent anyone from examining
how it goes about using the people’s power and the public purse. …
Law enforcement in secret is a gateway to fascism. Our federal
government must be better than that.”— The Atlantic Legal
Foundation
“The [Gag] rule violated the Constitution the
day it was promulgated, and no less today. … [Constitutional rights
and protections] are lost both to Americans currently gagged and to
future SEC enforcement targets who lack the nearly boundless
resources and stamina needed to go toe-to-toe with the SEC. Any
additional delay will give rise to new irreparable First Amendment
injury.”— The Buckeye Institute
“For over fifty years … the SEC’s complaint
stands as the last word on the matter, and defendants—even those
who have done nothing unlawful—must remain silent for life. The
SEC’s Gag Rule means that the government’s side of the story will
be the only side of the story the public ever knows. … The
governmental interest, apparently, is the power of the government
to protect its reputation by silencing potential critics. No court
has held that that is a cognizable government interest in the First
Amendment context.”— Cato Institute“The pressure to
settle with the SEC is immense, and settling parties have no
opportunities to negotiate [the Gag]. SEC’s policy of silencing
settling defendants is an extortionate exaction of constitutional
rights—not a voluntary waiver. Settlement … affords regulators
‘extraordinary discretion’ to press ‘novel legal theories’ that ‘no
judge will ever scrutinize’—since those regulators can simply
‘threaten the industries with the risk of such large penalties that
they’ll agree to a deal[.]’”— Chamber of Commerce of the
United States of America
“There is some precedent in the law for the
concern that someone could undermine confidence in the government
or create the impression that the government did not have a basis
for what it did, but that precedent does not help the SEC. That
precedent is pre-Constitutional: it derives from the royal
prerogative that the king of England could do no wrong. … This
royal prerogative, however, cannot be exercised by the Securities
and Exchange Commission. The First Amendment was intended to
abolish such features of English law.”— Competitive
Enterprise Institute and Investor Choice Advocates Network
“[Press] Petitioners … suffer a First Amendment
violation because of their inability to receive this information
from the gagged defendants. No one could claim they consented to
the waiver of their right to receive information. … What results is
a government commission forcing all but the wealthiest defendants
into silence. … [P]rivate settlements typically put the defendants’
denial of the veracity of the claim directly into the agreement’s
recitals … yet the sky has not fallen. [T]he SEC’s Gag Rule is an
aberration.”— Hamilton Lincoln Law Institute and the
Manhattan Institute
“The SEC’s no-denial policy is remarkably
similar to … the most famous violation of freedom of petition in
American history: … gag resolutions against abolitionism. [John
Quincy Adams] insisted that the resolutions ‘interfere[d] with the
sacred right of petition.’… SEC’s Gag operates much like these
pro-slavery gag resolutions. It singles out a particular topic—the
past SEC settlement—as off limits to government petitions. It
prevents defendants from providing true information … or calling
into question the SEC’s enforcement regime.”— Institute for Free
Speech
“The SEC asserts an entitlement to extort via
pressure something that no court could ever impose: a perpetual
prior restraint against criticism of the agency. … The prohibition
on prior restraints is not simply at the core of our First
Amendment jurisprudence—it was the motivation for the First
Amendment in the first place. … The government has no interest—and
can have no interest, consistent with the First Amendment—in
censoring criticism of the government.”— Liberty Justice
Center
“The SEC’s approach has been to sue industry
participants and extract a settlement that muzzles the Defendant.
With the Defendant silenced, the SEC then tells only its story of
the case. … These SEC-imposed blind spots do great harm—deterring
potential participants from entering emergent industries and
increasing compliance costs for those who do. This undermines the
SEC’s self-described mission to foster capital formation. …
Ironically, the SEC regularly requires transparency from the
entities it regulates.”— Texas Blockchain Council and AI
Innovation Association
“While at odds with America’s traditional First
Amendment principles, the SEC’s Gag Rule is perfectly consistent
with the unfortunate tendency of government bureaucracies to use
secrecy as a means to increase their own powers at the expense of
the public. ‘Information is power, and it is no mystery to
government officials that power can be increased through controls
on the flow of information.’ …[C]ourts must exercise their
authority to protect the public’s access to crucial information
about its government rather than permit a powerful federal agency
to regulate in the shadows away from public scrutiny.”—
Thomas More Society
NCLA released the following
statements:
“The depth of scholarship, historical
understanding and legal reasoning in each of these amicus curiae
briefs is breathtaking—and devastating to the SEC’s
unconstitutional and unlawful Gag Rule. The Court must ensure it
expires in well-deserved infamy.”— Peggy Little, Senior
Litigation Counsel, NCLA
“The silver lining to the five-plus years it
took the SEC to rule against NCLA’s Gag Rule Petition is that we
have built up our strategic alliances over that time. The wealth of
truly fantastic amicus curiae briefs filed in this case in support
of our client Petitioners astounds. I would like to thank the SEC
for taking so long to rule that it allowed the coalition against
the Gag Rule to grow. Even more, I would like to thank all of these
organizations for caring deeply enough about the First Amendment
rights being trampled by the SEC to contribute these amicus
briefs.”— Mark Chenoweth, President, NCLA
For more information visit the case page
here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights
group founded by prominent legal scholar Philip Hamburger to
protect constitutional freedoms from violations by the
Administrative State. NCLA’s public-interest litigation and other
pro bono advocacy strive to tame the unlawful power of state and
federal agencies and to foster a new civil liberties movement that
will help restore Americans’ fundamental rights.
Ruslan Moldovanov
New Civil Liberties Alliance
202-869-5237
ruslan.moldovanov@ncla.legal