A legal activist group aiming to weaken the administrative state plans to sue the SEC over its long-standing practice of barring defendants who settle charges from later denying the allegations levied by the agency.
The New Civil Liberties Alliance said Tuesday that it will challenge the Wall Street regulator’s decision to reject the group’s petition to amend the so-called Gag Rule, setting up its latest legal battle against the SEC. The NCLA has separately been a leading force in the fight over the constitutionality of the SEC’s in-house courts.
“SEC’s refusal to revisit the lifetime gag that it imposes as a non-negotiable condition of settlement demeans the agency and its professed commitment to transparency and disclosure in the financial markets,” NCLA Senior Litigation Counsel Peggy Little said in a statement. “We have every confidence that a court will untie the gag for them and allow the American public, not SEC censors, to decide the validity of SEC’s suspect enforcement practices.”