US appeals court upholds SEC 'gag rule' over free speech objections

Source: Reuters

August 6, 2025 3:47 PM EDT Updated 11 hours ago


Aug 6 (Reuters) - A federal appeals court on Wednesday upheld the U.S. Securities and Exchange Commission's so-called "gag rule," rejecting a claim it illegally silences defendants who want to criticize the regulator after settling civil enforcement cases. In a 3-0 decision, the 9th U.S. Circuit Court of Appeals said the rule was not unconstitutional on its face, but could violate the First Amendment depending on how it is applied.

The rule, reflecting SEC policy dating to 1972, often requires settling defendants to say at least that they neither admit nor deny the regulator's allegations. Twelve petitioners had been appealing the SEC's decision in January 2024 not to amend the rule, including eight people whose SEC settlements triggered it.

One petitioner, former Xerox chief financial officer Barry Romeril, took a similar case to the U.S. Supreme Court in 2022 in an appeal backed by billionaire and longtime SEC critic Elon Musk, but that court refused to consider it. In Wednesday's decision, Circuit Judge Daniel Bress said that while some defendants find the rule coercive, they remained free not to settle, and instead to speak out against the SEC.

He also said the SEC had an interest in deciding how to try its own cases, including by giving defendants different options, knowing that scrapping the rule could lead to fewer settlements. "The SEC has an interest in giving defendants the option to agree to a speech restriction as part of a broader settlement agreement," Bress wrote.

Read more: https://www.reuters.com/legal/government/us-appeals-court-upholds-sec-gag-rule-over-free-speech-objections-2025-08-06/