The U.S. Securities and Exchange Commission (SEC) has rescinded a non-disclosure mandate known as the “gag rule,” which previously barred defendants who settled with the regulator from publicly denying, disputing, or criticizing the agency’s allegations following the case resolution, as reported by Bloomberg.
This regulation, specifically Rule 202.5(e), was initially established in 1972. Those who opposed the rule argued that it infringed upon the First Amendment right to free speech held by the parties accused by the commission. Under this provision, the SEC would withhold settlement until the opposing party consented to refrain from publicly challenging the charges laid out in the complaint or administrative order.
Bloomberg further points out that billionaire Elon Musk, who has been involved in disputes with the SEC, had voiced opposition to this requirement and supported initiatives to overturn it. Attempts to eliminate the “gag rule” have occurred on numerous occasions; notably, in 2024, the SEC rejected a petition urging a change in its policy regarding these non-disclosure terms.
SEC Chair Paul Atkisson stated, “Scrutiny of the government is a vital component of American tradition.”
About the Author
