Washington, DC (July 31, 2020) – For nearly 50 years, the U.S. Securities and Exchange Commission (SEC) has imposed a Gag Rule that silences people with a lifetime gag enforced through a threat of a reopened prosecution. NCLA client Barry D. Romeril, the former Chief Financial Officer of Xerox, is challenging the constitutionality of such a gag imposed on him by the SEC in a 2003 settlement and consent order.
Today the New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, fired back with a reply brief in Barry D. Romeril v. SEC, countering the agency’s faulty arguments in support of the Gag Rule. Mr. Romeril’s appeal seeks reversal of the district court’s decision to reject his motion for relief from judgment so that he may tell his side of the story publicly. Gag orders interfere with the general public’s right to receive full information about cases, and they prevent Mr. Romeril from exercising his right to free speech and petition.
NCLA’s brief filed in the U.S. Court of Appeals for the Second Circuit details several different ways in which SEC gag orders like this one violate the First Amendment. It also points to the binding circuit precedent in Crosby v. Bradstreet Co., which held that a party subject to an unconstitutional, judicially imposed “prior restraint” on future speech may vacate the gag, even decades later. NCLA argues that the district court erred in its opinion that 14 years is too long to wait to challenge an unconstitutional order. Circuit precedent dictates that motions under Rule 60(b)(4) of the Federal Rules of Civil Procedure may be made “at any time” if the underlying order is void, as it is here.
Ten amici curiae have joined in support thus far.
NCLA released the following statements:
“When SEC brings charges against Americans, it issues an inflammatory press release that too often immediately destroys lives, livelihoods, personal relationships, businesses and reputations. When defendants settle with this powerful agency—as 98% do—SEC demands they never speak publicly about the unproven claims against them. It is far past time for this unconstitutional and unlawful practice to stop. The gag shields the agency from criticism and entrenches a dangerous culture of overcharging Americans who are unable to defend themselves or bring agency abuses to the attention of the public and lawmakers.”
— Peggy Little, Senior Litigation Counsel, NCLA
“SEC is unwilling to accept what is painfully obvious, it cannot restrain truthful speech in perpetuity. SEC presents its demand for silence or devastating litigation as a choice. But, weighed down by the inequities in bargaining power between the SEC and its enforcement targets, such a choice is a false one. It is time for the Court to correct this unconstitutional practice.”
— Kara Rollins, Litigation Counsel, 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.