The Supreme Court of the United States has been asked to weigh in on a decades-old federal policy that prevents individuals from speaking publicly about their legal settlements with the government.
On Tuesday, the Liberty Justice Center (LJC) filed an amicus brief in the case Powell v. United States Securities and Exchange Commission, arguing that a 1972 SEC rule creates an unconstitutional “gag” on American citizens.
The rule in question mandates that anyone who settles a regulatory enforcement case with the SEC must agree to permanent silence regarding the matter. Under these terms, if a person makes a public statement about their case after a settlement is reached, the SEC maintains the right to reopen the investigation and pursue further action.
According to the LJC, this policy was designed to shield the agency from public criticism and forces citizens to trade away their First Amendment rights to resolve legal disputes.
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This latest filing follows a 2024 challenge in the U.S. Court of Appeals for the Ninth Circuit. While that court ultimately rejected the challenge, the judges noted in their decision that the rule was being upheld on “necessarily narrow grounds” and acknowledged that such requirements “could impermissibly intrude on First Amendment rights.”
The legal brief submitted to the Supreme Court outlines several specific constitutional concerns. It argues the rule functions as a lifelong speech ban that prevents individuals from sharing their experiences with lawmakers, reporters, or the general public.
Furthermore, the LJC contends that the rule allows the government to retaliate against citizens for criticizing federal agencies—a form of speech traditionally granted the highest level of protection under the law.
“The federal government has criminal law enforcement authority to punish criminals,” said Reilly Stephens, Senior Counsel and Director of Amicus Practice for the Liberty Justice Center. “This is not meant to be a point of leverage for the government to strip citizens of their First Amendment rights. And if ruling for the plaintiff here means that some federal enforcement actions might fall under public scrutiny, that’s how democracy is supposed to work.”
The LJC’s filing asserts that avoiding public embarrassment is not a legitimate government interest and that the SEC’s practice of coercing speech waivers is fundamentally unconstitutional. The Supreme Court will now determine whether to hear the case and address the legality of these settlement-based silence requirements.
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