On Monday, the Supreme Court refused to review the SEC’s now-rescinded “neither admit nor deny” policy, otherwise referred to as the “gag rule.” As Liz noted back in May, the SEC announced that it had issued a final rule to rescind its “neither admit nor deny” policy, and to rescind Rule 202.5(e) of the SEC’s informal rules of procedures, which codified that policy. This Bloomberg article notes:

The US Supreme Court refused to review the constitutionality of a now-rescinded Securities and Exchange Commission policy that forced people and companies settling enforcement cases to never publicly criticize or contest the Wall Street watchdog’s claims.

The justices without comment on Monday turned away a constitutional challenge over whether the SEC’s so-called gag rule violated individuals’ rights.

The justices declined to hear arguments from Thomas Powell, who was accused by the SEC in 2021 of making misrepresentations and omissions in connection with more than a dozen unregistered oil and gas securities offerings. Powell agreed to pay a penalty of $75,000 to end the case. His firm agreed to a separate penalty.

The settlement included a provision that he neither admitted to nor denied the SEC’s allegations. As part of the deal, he could never publicly deny wrongdoing. The provision amounted to “rank censorship,” his attorneys from the New Civil Liberties Alliance said.

The SEC had argued to the Supreme Court that the constitutional challenge was now moot, given the agency’s action in May to rescind the policy.

– Dave Lynn