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Volume XII, Number 183

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If The SEC Favors Full Disclosure, Why Does It Have A "Gag Rule"?

In 1972, the Securities and Exchange Commission announced its "policy not to permit a defendant or respondent to consent to a judgment or order that imposes a sanction while denying the allegations in the complaint or order for proceedings. In this regard, the Commission believes that a refusal to admit the allegations is equivalent to a denial, unless the defendant or respondent states that he neither admits nor denies the allegations".   In 2003, Barry Romeril settled with the SEC and was thereby unable to speak openly about this policy.  Now he is asking the U.S. Supreme Court to remove the muzzle.  Romeril v. Securities and Exchange Commission, S. Ct. No. 21-1284.  

Recently Mr. Romeril gained support from several other adversaries of the SEC - Mark Cuban, Phillip Goldstein, Elon Musk, Nelson Obus.  Together with the Investor Choice Advocates Network (ICAN),they have filed an amicus brief making the following points:

  • The SEC’s Gag Orders Conceal Information from the Market

  • The SEC’s “Hobson’s Choice” Settlements Are No Substitute for Market Transparency

  • The SEC Demands Transparency Regarding Settlements Between Private Parties

  • The SEC Is Not Infallible and Should Welcome Exposure of Its Unproven Allegations to Scrutiny

To this list, I would add this question that I posited a few years ago: Why Does The SEC Insist That Some Defendants Lie?

Happy Kodomo no Hi (子供の日)!

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 125
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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