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29 Widener L. Rev. 1 (2023)
Why the SEC Gag Rule Silencing Those Who Settle SEC Investigations Violates the First Amendment

handle is hein.journals/wlsj29 and id is 11 raw text is: WHY THE SEC GAG RULE SILENCING THOSE WHO SETTLE SEC INVESTIGATIONS VIOLATES THE FIRST AMENDMENT Rodney A. Smolla* I. INTRODUCTION In 1972, the Securities and Exchange Commission promulgated a policy to silence those with whom the SEC has reached a settlement and consent decree arising from an SEC administrative investigation.1 Under the policy, no person or entity agreeing to a settlement with the SEC and voluntarily entering into a consent decree may deny the allegations of wrongdoing.2 Detractors of the No Deny Policy aptly describe it, less charitably, as the SEC Gag Rule, the term used in this article. As codified, the SEC Gag Rule reads in its entirety: The Commission has adopted the policy that in any civil lawsuit brought by it or in any administrative proceeding of an accusatory nature pending before it, it is 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. Accordingly, it hereby announces its policy not to 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. In President, Vermont Law and Graduate School. This article arose from a presentation at the Widener Law Review Symposium in the spring of 2022 when I was serving as Dean of the Widener University Delaware Law School, organized by my friend and colleague, Distinguished Professor Alan Garfield, a scholar who has done groundbreaking work on the issues discussed here. That symposium presentation in turn prefaced my writing of a Supreme Court amicus brief in Romeril v. SEC, litigation described at length in this article. Brief of Const. L. & First Amend. Scholars as Amici Curiae in Support of Petitioner, Romeril v. Sec. & Exch. Comm'n, 142 S. Ct. 2836 (2022) (Mem.) (No. 21-1284). That brief was filed by Lawrence S. Ebner as counsel of record for the American Legal Foundation. Id. at 22. The brief that I authored, entitled Brief of Constitutional Law & First Amendment Scholars as Amici Curiae in Support of Petitioner, was joined by Professors Alan Garfield, Clay Calvert, Burt Neuborne, Nadine Strossen, and Eugene Volokh. Id at 1-2. Since my authoring of this article, the Supreme Court denied review of the Second Circuit's decision. Romeril, 142 S. Ct. at 2836. Such is the fate of authors who write about pending cases. Nothing in the Supreme Court's denial of review, however, shakes me in my conviction that, for the reasons expressed in this article, that the Second Circuit got it wrong. The views expressed in this article are adapted from the views expressed at the Symposium and written in the amicus brief. I am thankful to all of my colleagues for their critiques of these views at the Symposium and their thoughtful suggestions on the amicus brief and this article. 117 C.F.R. § 202.5(a) (2022). 2 Id. § 202.5(e). 1

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