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20 Conn. L. Rev. 265 (1987-1988)
The First Amendment and the SEC

handle is hein.journals/conlr20 and id is 279 raw text is: THE FIRST AMENDMENT AND THE SEC
by Nicholas Wolfson*
Until a few years ago, nobody would have believed that a first
amendment attack on a Securities and Exchange Commission (SEC)
regulation would stand a chance. Any such attempts were perfunctory
in nature and dismissed with some contempt by the courts. However,
when the Supreme Court in 1976 first determined that so-called com-
mercial speech was to some extent protected by the first amendment,2
it set in motion a trend that would ultimately threaten SEC and other
economic regulation. A response to this threat was evident in the recent
case, Lowe v. SEC,3 where the Supreme Court struck down the heart
of the Investment Advisers Act4 (Advisers Act) by statutory inter-
pretation, not by constitutional construction. The Supreme Court con-
struction feared the impact of the first amendment on the Advisers Act
if the majority entered into the thicket of constitutional interpretation.5
This article examines the impact of the first amendment on the
principal areas of SEC regulation. It begins with an analysis of com-
mercial speech doctrine and its relationship to political and artistic ex-
pression. Next, it explores the relationship between mandatory disclos-
ure regulation and prior restraint and then examines the application of
the first amendment to prospectus disclosure, proxy regulation, invest-
ment adviser regulation, and, finally, anti-fraud doctrine. It argues
* Professor of Law, University of Connecticut School of Law. A.B., Columbia College; J.D.,
Harvard University.
I thank George Benston, William Carney, Jonathan Macey, and Henry Manne for helpful
comments on earlier drafts.
1. See generally Note, The Federal Securities Laws, The First Amendment, and Commercial
Speech: A Call for Consistency, 59 ST. JOHN'S L REv. 57 (1984).
2. Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748
(1976). In that case, the Court invalidated a Virginia statute that prohibited pharmacists from
advertising the price of prescription drugs. The Court held that commercial speech is not wholly
outside first amendment protection so long as it is not false, misleading, or proposes illegal trans-
actions. Id. at 762, 770.
3. 472 U.S. 181 (1985).
4. Investment Advisers Act, 15 U.S.C. §§ 80b-I to 80b-21 (1982). See infra text accompany-
ing notes 56-60.
5. See infra notes 128-139 and accompanying text.

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