Over five years ago, the New Civil Liberties Alliance (“NCLA”) petitioned the Securities and Exchange Commission (“SEC”) to amend 17 C.F.R. § 202.5(e) (the “Gag Rule”, “Gag” or “Rule”). Adopted 51 years ago as a so-called housekeeping rule and thus without the benefit of notice-andcomment rulemaking procedures in violation of the APA, § 202.5(e) has gagged countless enforcement targets in perpetuity. SEC justifies its en masse silencing as “important to avoid creating, or permitting to be created, an impression that a decree is being entered or a sanction imposed, when the conduct alleged did not, in fact, occur.” SEC does “not permit a defendant or respondent to consent to a judgment or order that imposes a sanction while denying the allegations in the complaint or order for proceedings.” It enforces this Rule through mandatory provisions in its settlement agreements which gag defendants and respondents. As a result, SEC routinely and systematically demands silence and suppresses speech based on its content and viewpoint as a non-negotiable condition of settlement.

Today, Petitioners—NCLA now joined by Barry D. Romeril, Raymond J. Lucia, and Christopher A. Novinger—renew the pending Petition for Rulemaking (No. 4-733) and ask the Commission to repeal its unconstitutional Gag Rule once and for all.

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On January 30, 2024, SEC denied NCLA’s petition. Read SEC’s full letter here.