How does the SEC prevent defendants who settle from speaking about their own case?
Easy: the SEC’s “gag rule.”
A little-known—but unconstitutional—SEC policy is before the Supreme Court this year. The Hamilton Lincoln Law Institute filed an amicus brief supporting the petition filed by the New Civil Liberties Alliance (NCLA), which challenges SEC settlement provisions that prohibit defendants from denying the agency’s allegations—even after a settlement agreement.
Why does this matter?
The Securities and Exchange Commission is a regulatory agency that, according to its website, “protects investors from misconduct, promotes fairness & efficiency in the securities markets, and facilitates capital formation.” Its congressionally mandated mission is to protect investors from fraud by enabling them to make decisions with full information.
But one of its regulations contradicts this mission—purposefully inhibiting free speech.
Under current SEC policy, individuals and firms accused of securities violations may settle enforcement actions only if they agree to not speak further about the case and the SEC’s conduct in prosecuting–up to and including maintaining their innocence.
Effectively, defendants must choose between costly, prolonged litigation (a costly endeavor as the SEC, a government agency, has seemingly endless pockets and an annual budget of $1.908 billion) and surrendering their right to speak freely and publicly about their own case.
Moreover, the gag rule limits journalists’ ability to fully report on these cases. By training, journalists covering court cases or legal matters get perspectives from both sides. However, under the SEC gag rule, as defendants are prohibited from speaking about their case, a journalist literally cannot get both perspectives. The SEC only permits its own viewpoint—which the agency does not hesitate to share via press release—entrance into the marketplace of ideas. It’s a prime example of the viewpoint discrimination that the First Amendment abhors.
HLLI, alongside the Manhattan Institute, filed an amicus brief on April 20, 2026. We hope the Supreme Court grants NCLA’s petition for review, sides with free speech, and rejects the idea that a federal agency can immunize itself from public accountability.