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A Full Court Press on the SEC Gag Rule

When the SEC charges Americans, it issues inflammatory press releases setting out a litany of misdeeds and fraud. While these are just allegations, these alarming releases instantly destroy lives, reputations and future occupations. Imagine that these charges are untrue or that the government cannot carry its burden on what prove to be novel and untested theories of liability unheard of at law. BUT, a successful defense will cost you millions and many years of your life—against an agency that can outlast and outspend you.

Faced with this prospect of spending millions in defense of a protracted proceeding with the cards stacked against you, you throw the towel in and settle—only to learn that SEC imposes a gag that forbids you from ever contradicting the government’s theory or allegations against you—for life! No judge or jury has ever considered the facts of your case. This gag is not something the SEC could ever win at trial. But, to all the world, your reputation will forever be tarnished. You lose your family, your friends, your job, and are already on the verge of financial ruin. The SEC’s press releases remain the only and final word about you. But that could never happen in America, where we have the First Amendment, right? Where the Supreme Court has long guaranteed unabridged free speech rights to even convicted felons?

This is the unconstitutional nightmare of the SEC Gag Rule. The SEC—an agency outlier—has been charging Americans for fifty years knowing that their lawless rule means those charges can never be publicly denied.

NCLA has recently taken the SEC to court on behalf of nine courageous gagged individuals from across the country and two press organizations represented by NCLA to challenge whether this is remotely constitutional. Each one of these individuals has a compelling story to tell.

Senior NCLA Litigator Peggy Little moderates a panel featuring NCLA clients Thomas Powell and Cassandra Toroian who want to tell their stories and Christopher Rausch of the Cape Gazette of Delaware who wants to publish those accounts telling both sides of the story of an SEC settlement. Just like the First Amendment guarantees.