Settlements are the “most common” way the SEC resolves enforcement actions, but this stops defendants from speaking out, says Hester Peirce.
A United States Securities and Exchange Commission (SEC) rule forbidding defendants from criticizing the agency’s claims when settling enforcement actions “undermines regulatory integrity” and free speech, says one of its commissioners.
In a Jan. 30 statement, SEC commissioner Hester Peirce disagreed with her agency’s denial of a petition to amend its 1972 “gag rule,” which forbids defendants from denying or refusing to admit to the SEC’s allegations following a settlement.
“The policy of denying defendants the right to criticize publicly a settlement after it is signed is unnecessary, undermines regulatory integrity, and raises First Amendment concerns,” Peirce wrote.
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