This is the Cato Daily Podcast for Wednesday, May 4, 2022.

I'm Caleb Brown.

The Securities and Exchange Commission is a longstanding policy of effectively silencing

everyone who settles with them.

It has big implications for freedom of speech

and for petitioning the government for a redress of grievances.

A Cato Institute and others have filed a brief

in a court challenge to the rule.

Cato's Jennifer Schump and Will Yeatman discuss the challenge.

Well, since 1972, for 50 years now, the Securities and Exchange Commission, the SEC, has had this rule on the books that in essence

prohibits any party that settles any enforcement action brought by the SEC that prohibits these parties from ever speaking

about their innocence, forever denying their guilt subsequent to the settlement going into effect.

It's known as a gag order rule.

And again, this is applied to The SEC last year initiated 650 enforcement actions.

Thousands of individuals have been subject to this gag order that compels silence.

One such individual, Barry Rommel, got ensnared in a 2003 enforcement action by the SEC against the Xerox Corporation.

And to be clear, this was a novel development in the law that from 20 years ago. That is to say the SEC when they took on Xerox and

ultimately Barry Rommel was breaking new ground, new legal ground, and there wasn't necessarily notice for Mr.

Rommel and Xerox that they were in violation of the law.

It's not as though they had run afoul of a long-held well-known rule.

So he gets caught up in this.

Rather than fight the allegations, rather than take on the weight of the government in this adversarial proceeding, Rommel decided to settle.

...