SEC Commissioner Hester Peirce Criticizes Gag Rule on Settlements
SEC Commissioner Hester Peirce has expressed her disapproval of the US Securities and Exchange Commission’s (SEC) policy that enforces a gag rule affecting defendants who settle. In a statement published on the SEC’s website, Peirce argued that the rule is particularly unfair to those who are less equipped than major players like Ripple and Grayscale Investments when entering litigation. The rule, which dates back to 1972, prohibits defendants from denying allegations post-settlement. Peirce, known as “crypto mom,” believes that the rule lacks a compelling rationale and infringes upon free speech rights.
The Commission’s Requirement for Silence
The SEC requires settling defendants to either admit allegations or remain silent as a condition for resolving enforcement actions. This mandatory language forces defendants to withdraw any documents that deny allegations and imposes penalties for breaching the rule. The New Civil Liberties Alliance (NCLA) proposed a revision in 2018 to allow defendants to admit, deny, or state neither admission nor denial of allegations in civil lawsuits or administrative proceedings.
Americans Should Have the Right to Criticize the Government
Hester Peirce supports reconsideration of this issue and emphasizes the importance of allowing Americans to criticize the government without fear of reprisal. She questions the historical basis for the policy and argues that its necessity is questionable. Peirce raises concerns about First Amendment rights due to the policy’s restriction on speech and suggests that silencing defendants may hinder public scrutiny and accountability. She urges the Commission to include a review of the no-deny rule on its agenda or eliminate it if deemed excessive.
Hot Take: SEC Commissioner Challenges Gag Rule Impacting Defendants
SEC Commissioner Hester Peirce has criticized the SEC’s gag rule that affects defendants who settle, arguing that it is unfair and violates free speech rights. The rule prohibits defendants from denying allegations post-settlement. Peirce questions the rationale behind the rule and its historical basis. She suggests that silencing defendants may hinder public scrutiny and accountability. Peirce calls for a reconsideration of the no-deny rule or its elimination if deemed excessive. This criticism raises concerns about the impact of the rule on defendants’ ability to express their views and highlights the importance of allowing Americans to criticize the government without fear of reprisal.
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