Constitutional challenge lodged against SEC gag regulation

By Rebecca Kahn, J.D. Non-profit think-tank and publisher The Cato Institute has brought an action against the SEC seeking declaratory judgment that the 1972 “Gag Regulation” is unconstitutional under the First Amendment. Cato claims injury because a specific gag order prevents it from publishing an entrepreneur’s account that he was the victim of an overzealous SEC investigation (Cato Institute v. SEC, January 9, 2019). Settlement terms. An American entrepreneur contracted with Cato to write a book about his experience at the center of an SEC investigation. Although the SEC agreed to settle his case with no admission of wrongdoing, no details could be revealed because, as part of the settlement, the SEC demanded that he agree to a gag order under Gag Regulation 17 C.F.R. Section 202.5(e), prohibiting him from ever discussing his case or even criticizing the agency’s handling of it. Banned book. The entrepreneur wrote and sent a manuscript to Cato,…

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