Romeril v. SEC

SIGN UP FOR NCLA UPDATES

CASE STATUS:
Motion for Relief from Judgment filed 5/6/2019. Pending

CASE START DATE:
May 6, 2019

DECIDING COURT:
United States District Court for the Southern District of New York, Hon. Denise L. Cote

ORIGINAL COURT:
United States District Court for the Southern District of New York, Hon. Denise L. Cote

 

CASE SUMMARY

When Barry D. Romeril settled with the United States Securities and Exchange Commission (SEC) in June of 2003 he didn’t know he would live to regret it 16 years later. That is because order to settle his case, the SEC required that he agree to be bound by a Gag Order- a little known tool of the SEC meant to silence people for life regarding cases brought against them.  NCLA has moved to remove the gag order from his consent agreement because it is an unconstitutional prior restraint and content-based restriction on speech, abridging freedom of the press and Americans’ right to petition.   In October of 2018, NCLA pioneered the legal challenges to this rule by petitioning the SEC to amend its gag rule, setting forth in detail the numerous constitutional and legal infirmities of this unconstitutional and disturbing practice.

CASE DOCUMENTS

May 6, 2019 | Memorandum In Support of Motion For Relief From Judgement

PRELIMINARY STATEMENT

Movant Barry D. Romeril moves pursuant to Fed. R. Civ. P. 60(b)(4) for relief from the final judgment’s prohibition of his future truthful speech about this case. Paragraph 11 of the Consent of Barry D. Romeril (“Consent”) incorporated into the final judgment is void because it is an unconstitutional prior restraint and a content-based restriction on speech that violates the First Amendment of the U.S. Constitution, and for other reasons more fully set forth below. An Amended Consent Order omitting the offending gag provision has been submitted as part of this Motion.

Click here to read complete document.

May 6, 2019 | Motion for Relief from Judgement

Defendant Barry D. Romeril hereby moves pursuant to Fed. R. Civ. P. 60(b)(4) for relief from Judgement entered on June 16, 2001 as incorporating a void and unconstitutional prior restraint on speech in violation of the First Amendment of the United States Constitution and controlling Second Circuit case law, and for other reasons more fully set forth in the memorandum of law that accompanies this motion.

Click here to read complete document.

PRESS RELEASE

May 6, 2019 | NCLA Sues to Overturn SEC’s Unconstitutional ‘Gag Order’ that Never Expires in SEC v Romeril

Washington, DC (May 6, 2019) – The New Civil Liberties Alliance (NCLA) today filed a Motion for Relief from Judgment and Memorandum of Law with the U.S. District Court for the Southern District of New York on behalf of Barry D. Romeril. Mr. Romeril served as the Chief Financial Officer of the Xerox Corporation from 1993-2001.

NCLA has asked the court to remove a gag order placed on Mr. Romeril on June 5, 2003 as part of a Consent Order with the Securities and Exchange Commission (SEC) because it violates the First Amendment of the U.S. Constitution. Despite the passage of nearly 16 years, Mr. Romeril continues to be bound by the gag order provision.

The Consent purports to permanently forbid him from contesting any of the allegations in the Commission’s Complaint against him, regardless of the accuracy of those allegations or the truth of Mr. Romeril’s remarks. He faces the threat of reopened and renewed prosecution even for truthful speech challenging the allegations. NCLA contends that the Gag Order is a content-based restriction of speech, a forbidden prior restraint, and that it gives the SEC unbridled enforcement discretion by silencing Mr. Romeril in perpetuity.

The SEC’s gag rule was promulgated in 1972 without notice and comment. NCLA petitioned the SEC to amend the rule in October 2018, contending that the Commission lacks the authority to use the Gag Rule because it directly infringes upon the First Amendment rights of Americans and hides the agency’s enforcement practices from public scrutiny.

“SEC Gag Orders are unconstitutional prior restraints that violate Americans’ First Amendment rights and their due process rights. Congress itself could not enact a law that forbade defendants from speaking about the merits of their prosecutions. Surely the SEC cannot do by rule what even Congress cannot do by statute.”
Peggy Little, Senior Litigation Counsel, NCLA

ABOUT NCLA 

NCLA is a nonprofit civil rights organization 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.

For more information visit us online: NCLAlegal.org.

Contact:
Judy Pino
New Civil Liberties Alliance
judy.pino@ncla.legal
202-869-5218

OPINION

How the SEC Silences Criticism | Wall Street Journal

Its unconstitutional 1972 ‘gag rule’ is overdue for repeal.

By Peggy Little

One of the strongest rules in free-speech law is that the government may not engage in “prior restraint” of speech except in extreme circumstances. Yet the Securities and Exchange Commission does so routinely. Under a rule adopted in 1972, the SEC demands that parties entering into settlements with the commission be silenced about the prosecution forever. If they question the merits of the case against them, the SEC reserves the authority to reopen it.

“The result is a stew of confusion and hypocrisy,” Judge Jed Rakoff observed in a 2011 ruling. “The defendant is free to proclaim that he has never remotely admitted the terrible wrongs alleged by the S.E.C.; but, by gosh, he had better be careful not to deny them either. . . . An agency of the United States is saying, in effect, ‘Although we claim that these defendants have done terrible things, they refuse to admit it and we do not propose to prove it, but will simply resort to gagging their right to deny it.’ ”

After the 2008 economic crisis, the rule faced blistering criticism from judges and scholars, who noted that it violates the First Amendment and permits potentially collusive settlements that bilk shareholders and taxpayers and shields a powerful agency’s practices from public scrutiny.

The gag rule violates a hornbook’s worth of legal doctrine: It is a prior restraint and a content-based restriction on speech. It serves no compelling government interest while employing the most restrictive means to accomplish its ends. It prohibits truthful speech, compels government-scripted speech, violates due process, impairs the First Amendment rights to petition government, and infringes the right of the public to hear criticisms of the government.

It could not withstand the most cursory judicial scrutiny—and the SEC knows it. In fact, it has tucked away a caveat at the end of the rule that lifts the gag when a defendant testifies under oath, as long as the SEC is not a party. That suggests the SEC knows full well that its rule could silence truthful speech or even suborn perjury. What a clever device to avoid judicial scrutiny.

The SEC’s gag rule is a symptom of a broader problem: Administrative agency power tends to expand beyond its lawful scope. This is why the Founders were so obsessively concerned that the three branches of government operate publicly subject to carefully constructed checks and balances.


Ms. Little is senior litigation counsel with the New Civil Liberties Alliance, which has filed a petition with the SEC challenging provisions of the 1972 gag rule.