Washington D.C. —The Hamilton Lincoln Law Institute (HLLI) and the Manhattan Institute filed an amicus brief with the U.S. Supreme Court urging the Court to strike down the Securities and Exchange Commission’s longstanding “gag order” policy as unconstitutional.
The brief supports 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.
Under current SEC policy, individuals and firms accused of securities violations may settle enforcement actions only if they agree to never again deny the allegations against them. In practice, this forces defendants to choose between costly, prolonged litigation and surrendering their right to speak freely about their own case.
“This is a classic First Amendment problem,” said Adam Schulman, senior attorney with the Hamilton Lincoln Law Institute. “The SEC conditions settlement on silence—forcing defendants to either adopt the agency’s narrative or say nothing at all. Constitutional rights do not disappear at the settlement table.”
The brief argues that because the SEC has no legitimate interest in gagging defendants, doing so violates core constitutional protections. It also highlights the broader consequences of the policy, including limiting journalists’ ability to report on disputes and preventing the public from hearing alternative accounts of government enforcement actions.
Although the SEC maintains that defendants are free to take their cases to trial, the brief notes that litigation against a federal agency can take years and require substantial financial resources—creating significant pressure to accept settlement terms that restrict speech.
The name of the case is Powell, et al. v. Securities and Exch. Comm’n.
For more information about this case, please see our case webpage or contact the attorney below:
Adam Schulman, Senior Attorney
(610) 457-0856, adam.schulman@hlli.org.