SEC Commissioner Hester Peirce Disagrees with Denial of Petition to Amend Gag Rule

According to CryptoPotato, Hester Peirce, a commissioner for the United States Securities and Exchange Commission (SEC), has expressed her disagreement with the agency’s denial of a petition to amend a rule that prevents defendants from denying any allegations in settlement enforcement actions. The commissioner, popularly known as “Crypto Mom,” believes that the prohibition of denials from defendants prohibits the American public from lodging criticisms against the government and assessing its credibility. The gag rule is a part of the SEC’s policy adopted in 1972, which requires defendants to agree that they will not take any action or make public statements denying any allegations in the complaints brought against them. The petition, brought by the New Civil Liberties Alliance (NCLA), asked the agency to amend the rule to allow a defendant to consent to a judgment in which they admit, deny, or neither admitted nor denied the allegations in the complaint. However, the SEC denied the petition on the grounds that the NCLA’s arguments have no merit and that the gag rule is “a proper exercise of the Commission’s authority to decide how it will pursue its enforcement mission and settle cases.” Despite the SEC’s claims, Crypto Mom believes otherwise. “I agree with the petitioner that this issue warrants a spot on our rulemaking agenda. One thing I love about this country is that Americans can and often do criticize their government…This freedom to speak against the government and government officials is essential in a free society committed to the preeminence of the people,” she stated. The commissioner insisted that the policy of denying defendants the right to criticize a settlement after it is signed publicly undermines regulatory integrity and raises First Amendment concerns.