Amicus Curiae Brief — Thomas Joseph Powell, et al., Petitioners v. Securities and Exchange Commission

NO. 25-1100

In the

Supreme Court of the United States

THOMAS JOSEPH POWELL, ET AL.,

Petitioners,

v.

SECURITIES AND EXCHANGE COMMISSION,

Respondent.

__________________________

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF AMICUS CURIAE

COMPETITIVE ENTERPRISE INSTITUTE

IN SUPPORT OF PETITIONERS

Ondray T. Harris

Counsel of Record

Marin Murdock

COMPETITIVE ENTERPRISE INSTITUTE

1310 L. Street NW, 7th Floor

Washington, D.C. 20005

(202) 331-2265

ondray.harris@cei.org

April 20, 2026

SUPREME COURT PRESS

Counsel for Amicus Curiae

♦

(888) 958-5705

♦

BOSTON, MASSACHUSETTS

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...................................... iii

INTEREST OF THE AMICUS CURIAE ................... 1

SUMMARY OF ARGUMENT .................................... 1

ARGUMENT ............................................................... 6

I.

Rule 202.5(e) is an Unauthorized Inversion

of Congress’s Deliberate Transparency

Architecture. ..................................................... 6

A. FOIA’s architecture Rests on a Presumption

of Openness That Rule 202.5(e) Inverts ..... 7

B. The Broader Congressional Transparency Framework Confirms That Rule

202.5(e) Is Contrary to Public Policy .......... 8

C. The FOIA Inversion Is the Structural

Heart of the Constitutional Problem .......... 9

D. The Separation of Powers and Major

Questions Doctrine Confirm That No

Authorization Exists ................................. 10

II. The Constitutional Question Is Genuinely

Unresolved, and the Ninth Circuit’s Analysis

Is Demonstrably Incomplete.......................... 12

A. The Voluntariness of Settlement is a

Fiction for Many SEC Defendants

Constituting an Invalid Waiver of

First Amendment Rights ......................... 13

B. Rule 202.5(e) Functions as a Prior

Restraint in Operation, Regardless

of Its Characterization as a Settlement

Condition ................................................... 16

ii

TABLE OF CONTENTS (Cont.)

Page

C. The Gag Rule Does Not Survive

Strict Scrutiny—Even in the Best

of Circumstances....................................... 17

CONCLUSION.......................................................... 18

iii

TABLE OF AUTHORITIES

Page

CASES

TABLE OF AUTHORITIES

Axon Enterprise, Inc. v. FTC,

598 U.S. 175 (2023) ........................................... 11

Boruski v. Securities and Exchange

Commission, 340 F.2d 991 (2nd Cir. 1965) ...... 15

Brady v. United States,

397 U.S. 742 (1970) ........................................... 15

Broadrick v. Oklahoma,

413 U.S. 601 (1973) ............................................. 5

Collins v. Yellen,

594 U.S. 220 (2021) ..................................... 11, 12

Department of Air Force v. Rose,

425 U.S. 352 (1976) ............................................. 7

Department of Interior v. Klamath Water Users

Protective Ass’n, 532 U.S. 1 (2001)...................... 7

Dept. of Justice v. Reporters Comm.

for Freedom of the Press,

489 U.S. 749 (1989) ......................................... 7, 8

Globe Newspaper Co. v. Superior Court,

457 U.S. 596 (1982) ........................................... 10

John Doe Agency v. John Doe Corp.,

493 U.S. 146 (1989) ............................................. 7

Lamont v. Postmaster General,

381 U.S. 301 (1965) ........................................... 10

Loper Bright Enterprises v. Raimondo,

603 U.S. 369 (2024) ........................................... 11

Nat’l Archives & Records Admin. v. Favish,

541 U.S. 157 (2004) ............................................. 7

iv

TABLE OF AUTHORITIES (Cont.)

Page

Near v. Minnesota,

283 U.S. 697 (1931) ........................................... 16

New York Times Co. v. Sullivan,

376 U.S. 254 (1964) ........................................... 17

New York Times Co. v. United States,

403 U.S. 713 (1971). .......................................... 16

NLRB v. Sears, Roebuck & Co.,

421 U.S. 132 (1975) ............................................. 7

Powell v. United States Securities and

Exchange Commission,

149 F.4th 1029 (5th Cir. 2025) .......................... 12

Powell v. United States Securities and

Exchange Commission,

149 F.4th 1029 (9th Cir. 2025) ............................ 5

R.A.V. v. City of St. Paul,

505 U.S. 377 (1992) ........................................... 17

Reed v. Town of Gilbert,

576 U.S. 155 (2015) ........................................... 17

Richmond Newspapers, Inc. v. Virginia,

448 U.S. 555 (1980) ........................................... 10

SEC v. Jarkesy,

603 U.S. 109 (2024) ........................................... 15

Securities and Exchange Commission

v. Novinger, 40 F.4th 297 (5th Cir. 2022) ........... 5

Seila Law LLC v. CFPB,

591 U.S. 197 (2020) ..................................... 11, 12

Town of Newton v. Rumery,

480 U.S. 386 (1987) ................................. 5, 12, 13

v

TABLE OF AUTHORITIES (Cont.)

Page

United States v. Bloom,

450 F.Supp. 323 (E.D. Penn. 1978) ................... 15

United States v. Salerno,

481 U.S. 739 (1987) ............................................. 4

Whitman v. American Trucking Associations,

531 U.S. 457 (2001) ........................................... 11

CONSTITUTIONAL PROVISIONS

U.S. Const. amend. I ........... 4, 5, 10, 12, 13, 15, 16, 17

STATUTES

5 U.S.C. § 552 .............................................................. 2

5 U.S.C. § 552(a)(8)(A)(i) ........................................ 4, 7

5 U.S.C. § 552b,

The Government in the Sunshine Act of

1976 ...................................................................... 8

15 U.S.C. § 78w(a)(1)(Section 23(a)) ........................ 11

Pub. L. No. 89-487, 80 Stat. 250 (1966),

Freedom of Information Act, ............................... 6

Pub. L. No. 93-502, 88 Stat. 1561 (1974) ................... 6

Pub. L. No. 99-570, § 1802, 100 Stat. 3207

(1986) ................................................................... 6

Pub. L. No. 104-231, 110 Stat. 3048,

Electronic Freedom of Information Act

Amendments of 1996 ........................................... 6

Pub. L. No. 110-175, 121 Stat. 2524,

Open Government Act of 2007 ............................ 6

vi

TABLE OF AUTHORITIES (Cont.)

Page

Pub. L. No. 114-185, 130 Stat. 538,

FOIA Improvement Act of 2016 .......................... 6

JUDICIAL RULES

Sup. Ct. R. 10 ........................................................ 4, 12

Sup. Ct. R. 37.2 ........................................................... 1

Sup. Ct. R. 37.6 ........................................................... 1

REGULATIONS

17 C.F.R. § 202.5(e) .................... 2, 4-6, 8-12, 14, 16-18

OTHER AUTHORITIES

Hester Peirce,

Speech: Lies, Statistics, and Enforcement,

U.S. Securities and Exchange

Commission (Oct. 26, 2018), https://www.

sec.gov/newsroom/speeches-statements/

peirce-speech-lies-statistics-102618. .................. 3

James Madison,

Letter to W.T. Barry (Aug. 4, 1822) ..................... 6

Priyah Kaul,

Admit or Deny: A Call For Reform of the

SEC’s ”Neither-Admit-Nor-Deny” Policy,

48 U. MICH. J.L. REFORM 535 (2015) ................. 15

U.S. Securities and Exchange Commission,

Comments on Proposed Rule:

Amendments to the Commission’s Rules

of Practice, 2 (Release No. 34-75976; File

No. S7-18-15) (S.E.C. Misc., 2015) .................... 14

vii

TABLE OF AUTHORITIES (Cont.)

Page

U.S. Securities and Exchange Commission,

Press Release 2024-186, SEC Announces

Enforcement Results for Fiscal year 2024

(December 17, 2024), https://www.sec.gov/

newsroom/press-releases/2024-186..................... 3

U.S. Securities and Exchange Commission,

Press Release: SEC Announces

Enforcement Results for Fiscal Year 2023

(November 14, 2023), https://www.sec.

gov/newsroom/press-releases/2023-234. ............. 3

U.S. Securities and Exchange Commission,

Private Companies and the SEC, accessed

April 15, 2026, https://www.sec.gov/

resources-small-businesses/capitalraising-building-blocks/privatecompanies-sec. ..................................................... 3

1

INTEREST OF THE AMICUS CURIAE1

Amicus Curiae, COMPETITIVE ENTERPRISE INSTITUTE

(CEI), is a nonprofit educational and research institute

headquartered in Washington, D.C., dedicated to

promoting the principles of free markets, personal

liberty, and limited government. Since its founding in

1984, the institute has focused on raising public

understanding of the problems of overregulation through

policy analysis, commentary, and litigation. CEI also

pursues public-interest litigation to ensure that federal

agencies act within the constraints of the United

States Constitution, the Administrative Procedure Act,

and its enabling statutes. CEI’s mission is to develop

and advocate for policies that advance the right to

freedom, fairness, property, and prosperity for all

Americans.

SUMMARY OF ARGUMENT

Congress imposed a presumption of disclosure on

the government. The SEC has inverted that framework

by imposing a presumption of silence on private citizens.

Since 1972, the Securities and Exchange Commission

has required that every settlement includes the

1 Per Sup. Ct. R. 37.6, no counsel for a party authored this brief

in whole or in part, and no person or entity other than amicus

and its counsel made a monetary contribution to the preparation

or submission of this brief. Per Sup. Ct. R. 37.2, all parties were

given timely notice of the amicus curiae’s intent to file.

2

defendant’s permanent promise of silence. Under Rule

202.5(e), settling defendants are forbidden from ever

publicly denying or indirectly casting doubt on the

SEC’s account of its own cases. 17 C.F.R. § 202.5(e)

(1972). Settling defendants may not speak to journalists,

write op-eds, or contradict the Commission’s version

of events in any way, even if they are speaking truthfully or speaking to proceedings that concluded years

ago. Rule 202.5(e), “the gag rule,” serves not only as a

restraint on speech but brings about an opacity to government that is contrary to public policy, making this

a compelling case for certiorari.

Congress spent sixty years building a legal

architecture premised on exactly the opposite principle.

The Freedom of Information Act, enacted in 1966,

embeds a constitutional norm into federal law: information about how the government exercises its enforcement power belongs to the public. 5 U.S.C. § 552.

FOIA places the burden of justifying secrecy on the

government and requires agencies to show reasonably

foreseeable harm before withholding any record. Id.

Transparency is the default.

Rule 202.5(e) inverts this architecture. The SEC

achieves for human testimony what FOIA’s foreseeable

harm standard forbids it from achieving for its own

documents: permanent, unconditional suppression with

no burden of justification and no judicial review. FOIA

opens the government’s files; Rule 202.5(e) closes the

mouths of the people those files are about. A journalist

may obtain the SEC’s complaint, its internal memoranda,

its press releases, and its closing orders via FOIA. But

the one person with personal knowledge of the SEC’s

actions and contravening facts, who can present the

public with a complete picture to evaluate whether the

3

SEC acted fairly, accurately, and within its authority,

has been permanently silenced by a boilerplate

settlement condition.

Who bears the weight of that silence? In FY2024,

the SEC filed 583 total enforcement actions, of which

approximately 86 percent were brought against nonpublic-company defendants.2 Namely, individuals,

private firms, investment advisers, and broker-dealers.3

In FY2023, the SEC filed 784 enforcement actions;

only 91 of the 501 stand-alone actions were against

public companies.4 Quantitative and qualitative analysis

consistently confirms that the SEC has concentrated its

volume enforcement on smaller, less-resourced defendants: in FY2017, just 5 percent of all cases generated

62 percent of total penalties collected, and in FY2016,

the same 5 percent produced 75 percent of total recoveries.5 The natural conclusion from this data is that

the gag rule falls hardest on the defendants least able

to resist it.

2 U.S. Sec. & Exch. Comm’n, Press Release 2024-186, SEC

Announces Enforcement Results for Fiscal Year 2024 (December

17, 2024), https://www.sec.gov/newsroom/press-releases/2024-186.

3 Private Companies and the SEC, U.S. Securities and Exchange

Commission, accessed April 15, 2026, https://www.sec.gov/resourcessmall-businesses/capital-raising-building-blocks/private-companiessec.

4 U.S. Sec. & Exch. Comm’n, Press Release 2023-234, SEC

Announces Enforcement Results for Fiscal year 2023 (November

14, 2023), https://www.sec.gov/newsroom/press-releases/2023-234.

5 Hester Peirce, Speech: Lies, Statistics, and Enforcement, U.S.

Securities and Exchange Commission (Oct. 26, 2018), https://www.

sec.gov/newsroom/speeches-statements/peirce-speech-lies-statistics102618.

4

Two circumstances make this case an especially

compelling vehicle for certiorari. First, the rule conflicts

structurally with Congress’s deliberate transparency

policy, presenting a significant public policy issue

which is compelling grounds for Supreme Court review.

S. Ct. R. 10. Congress has enacted FOIA, the Government in the Sunshine Act, and the Open Government

Act: each reflecting the same foundational judgment

that the public has a right to know what its government does in its name. Rule 202.5(e) is an unauthorized inversion of that policy, imposed not by Congress

but by the agency itself, for the agency’s own institutional

benefit. The FOIA Improvement Act of 2016 codified a

“presumption of openness” requiring agencies to

withhold information only where they “reasonably

foresee that disclosure would harm a protected interest.”

5 U.S.C. § 552(a)(8)(A)(i). No such foreseeable harm

standard governs the SEC’s permanent suppression of

defendant speech and denial of public access to information concerning a closed government’s investigation

with consequences that affect the American public atlarge, where a witness is willing to speak out. Congress has authorized nothing of this kind.

Second, the constitutional question is genuinely

unresolved, raising substantial grounds for Supreme

Court review under S. Ct. R. 10(c). The SEC no admit/no

deny rule is facially invalid under the First Amendment.

Although facial challenges generally require showing

that no set of circumstances exists under which a law

would be valid as established in United States v.

Salerno, 481 U.S. 739 (1987), this Court has recognized

a limited exception in the First Amendment context,

where a law may be invalidated if it is substantially

overbroad relative to its plainly legitimate sweep.

5

Broadrick v. Oklahoma, 413 U.S. 601 (1973). It is this

overbreadth standard that applies to Rule 202.5(e),

and it is that standard the Ninth Circuit declined to

apply. The Ninth Circuit, applying the balancing

framework established in Town of Newton v. Rumery,

480 U.S. 386 (1987), declined to apply prior restraint

doctrine, declined to apply strict scrutiny, and expressly

reserved the question of whether the restriction is

constitutional in perpetuity. Powell v. United States

Securities and Exchange Commission, 149 F.4th 1029

(9th Cir. 2025). The court subsequently concluded

that without a specific set of facts before it, it could

not be proven that a substantial amount of protected

speech was violated by the rule. Id. at 1037. However,

in Securities and Exchange Commission v. Novinger,

40 F.4th 297 (5th Cir. 2022), the Fifth Circuit declined

to address the same First Amendment arguments

despite having a specific set of facts before them. Two

judges concurred, stating that although they did not

rule in favor of settling defendants in this instance,

the validity of the SEC’s rule was highly questionable,

and concluded that the SEC will likely need to

reevaluate its policy soon. Novinger, at 308 (Jones, J.

and Duncan J., Concurring). This doctrinal inconsistency

coupled with rule 205(e)’s violation of core constitutional

protections warrants this Court’s review. This case is

an ideal vehicle because it squarely presents the

legality of a uniform, nationwide SEC rule, not a casespecific application.

The argument that follows develops both grounds

in turn. Argument I addresses the FOIA inversion and

the structural constitutional problem it creates. Argument II addresses the First Amendment questions the

Ninth Circuit left unresolved.

6

ARGUMENT

I.

Rule 202.5(e) is an Unauthorized Inversion

of Congress’s Deliberate Transparency

Architecture.

This case presents a structural conflict between

an agency-imposed speech restriction and Congress’s

comprehensive transparency regime. Rule 202.5(e)

does not merely regulate speech. It reverses the statutory presumption that government accountability

flows from public access to information. James Madison

wrote in 1822 that “a popular government without

popular information, or the means of acquiring it, is

but a Prologue to a Farce or a Tragedy; or perhaps

both.” Letter to W.T. Barry (Aug. 4, 1822). That principle

is not merely aspirational. Congress translated it into

law in 1966 when it enacted the Freedom of Information Act, and the legislature has returned to repeatedly

reinforce it ever since. Freedom of Information Act,

Pub. L. No. 89-487, 80 Stat. 250 (1966), amended by

Pub. L. No. 93-502, 88 Stat. 1561 (1974); Pub. L. No.

99-570, §§ 3-6, 9-11, 110 Stat. 3049-54 (1996); Electronic

Freedom of Information Act Amendments of 1996,

Pub. L. No. 104-231, 110 Stat. 3048; Open Government

Act of 2007, Pub. L. No. 110-175, 121 Stat. 2524; FOIA

Improvement Act of 2016, Pub. L. No. 114-185, 130 Stat.

538. The entire arc of federal transparency legislation reflects a settled congressional judgment that

the government bears the burden of justifying secrecy,

not the citizen. Rule 202.5(e) reverses that judgment,

without congressional authorization, for the benefit of

the agency alone.

7

A. FOIA’s architecture Rests on a Presumption

of Openness That Rule 202.5(e) Inverts.

FOIA’s framework rests on three foundational

principles. First, government information is, by default,

public information. See John Doe Agency v. John Doe

Corp., 493 U.S. 146, 152 (1989) (noting FOIA’s “basic

policy of full agency disclosure”) (quotation omitted).

Second, the burden of justifying withholding falls on

the agency, not the requester. See Department of Air

Force v. Rose, 425 U.S. 352, 360-61 (1976). Third,

exemptions from disclosure must be “narrowly

construed.” Department of Interior v. Klamath Water

Users Protective Ass’n, 532 U.S. 1, 12 (2001). An

agency’s institutional interest in protecting its own

reputation, controlling the narrative about its enforcement record, or insulating itself from criticism is not,

standing alone, a cognizable interest under FOIA’s

exemptions. See NLRB v. Sears, Roebuck & Co., 421

U.S. 132, 149 (1975); Nat’l Archives & Records Admin.

v. Favish, 541 U.S. 157, 172 (2004) (public interest

under FOIA focuses on shedding light on government

conduct).

The FOIA Improvement Act of 2016 sharpened

this framework further. Congress codified a “foreseeable

harm” standard requiring agencies to identify a specific,

concrete harm before withholding any record. 5 U.S.C.

§ 552(a)(8)(A)(i). Under that standard, the SEC cannot

withhold documents about its enforcement conduct

merely because disclosure would be embarrassing or

contrary to the agency’s preferred narrative. See Dept.

of Justice v. Reporters Comm. for Freedom of the Press,

489 U.S. 749, 773 (1989) (public interest under FOIA

is limited to shedding light on “what the government

is up to”).

8

Rule 202.5(e) applies none of these constraints to

human testimony. Through FOIA, a journalist can

obtain the SEC’s complaint, its investigative memoranda,

its communications with witnesses, and its closing

orders. What FOIA cannot provide, and what the gag

rule ensures the public will never receive, is the firsthand account of the defendant who has direct knowledge of whether the SEC’s allegations were accurate,

whether the investigation was fairly conducted,

and whether the settlement was genuinely voluntary.

The SEC achieves for human testimony what FOIA’s

foreseeable harm standard forbids it from achieving

for its own documents: permanent, unconditional

suppression with no burden of justification, no

exemption analysis, and no judicial review.

B. The Broader Congressional Transparency

Framework Confirms That Rule 202.5(e) Is

Contrary to Public Policy.

FOIA does not stand alone. The Government in

the Sunshine Act of 1976, 5 U.S.C. § 552b, requires

that federal agency meetings be open to the public,

reflecting Congress’s judgment that the deliberative

processes of executive agencies should be subject to

public scrutiny. The Open Government Act of 2007,

Pub. L. No. 110-175, strengthened FOIA’s enforcement

mechanisms and reaffirmed the presumption of

openness. Together, these statutes form a comprehensive

framework premised on the principle that executive

agencies operate in the public’s name and must

answer to the public for how they exercise sovereign

power. See U.S. Department of Justice v. Reporters

Committee for Freedom of Press, 489 U.S. 749 (1989)

(describing FOIA’s purpose as ensuring public access

to information about “what their government is up to”).

9

By gagging defendants, Rule 202.5(e) deprives

the public of access to information directly related to

the Agency’s prosecution of individuals. These prosecutions are oftentimes for the benefit of the public by

protecting shareholders. Yet, the very public the agency

seeks to protect cannot access information to evaluate

the agency’s actions. The rule allows the SEC to settle

an investigation with a wrongdoer that may result in

the shuttering of a corporation. Yet, the shareholders

will never be able to find out any facts beyond what

the SEC has authorized publication on. Shareholders

and the public at-large have no ability to evaluate the

SEC’s actions or inactions in its investigations. The

opacity that this rule allows the SEC to operate with

violates society’s interests by preventing the public from

learning about government misconduct or agency overreach, particularly where the defendant is financially

disadvantaged and lacks legal fees to defend against

the SEC’s claims.

C. The FOIA Inversion Is the Structural Heart

of the Constitutional Problem.

The deepest constitutional infirmity of Rule

202.5(e) is not only that it restricts speech but that it

inverts the entire burden structure that Congress and

the Constitution have established for government information. Under FOIA, the presumption runs in favor of

disclosure. The government must justify secrecy.

Rule 202.5(e) reverses this presumption for the

most probative category of information about SEC

enforcement: the defendant’s firsthand account. Under

the gag rule, the presumption runs in favor of silence.

The government’s account which is transmitted through

press releases, enforcement databases, and FOIAresponsive records is the only account that enters the

10

public domain. The result is a self-referential, permanently one-sided public record composed entirely of

what the government chose to say about what it did.

This inversion matters structurally. Congress

designed FOIA so that the public could hold agencies

accountable through information. Congressional oversight, Inspector General review, and press accountability all depend on it. Judicial review of agency conduct

depends on a record that reflects reality, not just the

government’s preferred version of it. See Richmond

Newspapers, Inc. v. Virginia, 448 U.S. 555, 572–73

(1980) (recognizing a First Amendment right of access

grounded in the structural role of transparency in

democratic governance); Globe Newspaper Co. v.

Superior Court, 457 U.S. 596, 604–05 (1982) (holding

that First Amendment right of access serves to ensure

informed public discussion of governmental affairs

and citizen participation in self-government); Lamont

v. Postmaster General, 381 U.S. 301, 306–07 (1965)

(striking down a statute requiring affirmative opt-in to

receive mail designated as foreign political propaganda

as unconstitutional burden on First Amendment right

to receive information). Each of these mechanisms is

disabled when the only available account of an enforcement action is the account the agency itself provided.

Rule 202.5(e) is not merely a speech restriction. It is

an institutional self-insulation device which operates

by inverting the very presumptions that Congress

embedded in sixty years of transparency legislation.

D. The Separation of Powers and Major

Questions Doctrine Confirm That No

Authorization Exists.

Even if the SEC’s asserted interests were legitimate

and compelling, the rule would still fail because no act

11

of Congress authorized it. Under West Virginia v.

EPA, 597 U.S. 697 (2022), and Loper Bright Enterprises

v. Raimondo, 603 U.S. 369 (2024), agencies must identify

clear statutory authorization for actions of vast significance. The authority to permanently regulate the public

speech of every person who settles a civil enforcement

action with the SEC is authority of this magnitude.

The Securities Exchange Act grants the SEC broad

authority to regulate securities markets and bring

enforcement actions. 15 U.S.C. § 78w(a)(1) (Section

23(a)). It does not grant the SEC authority to impose

lifetime speech conditions as the price of settlement.

It does not grant the SEC authority to enact rules that

are contrary to the spirit FOIA. Under Loper Bright,

courts must independently determine whether an

agency has acted within its statutory authority, and the

answer here is plainly no. See Whitman v. American

Trucking Associations, 531 U.S. 457, 468 (2001) (“Congress . . . does not hide elephants in mouseholes.”). This

Court’s decision in Axon Enterprise, Inc. v. FTC, 598

U.S. 175 (2023), which recognized that structural constitutional issues are beyond the SEC’s expertise, reinforces the point: an agency that cannot adjudicate

the constitutional questions raised by its own rules

certainly cannot unilaterally impose and maintain a

speech suppression regime that has never been subjected to the scrutiny those rules require.

This Court has held in Seila Law LLC v. CFPB,

591 U.S. 197, 213-14 (2020), and Collins v. Yellen,

594 U.S. 220, 250-51 (2021), that agency structural

arrangements that insulate agencies from democratic

accountability are constitutionally suspect. Rule 202.5(e)

achieves that insulation not through formal structural

arrangement but through speech suppression: by perm-

12

anently silencing every person, particularly financially

disadvantaged defendants, with direct knowledge of

SEC enforcement conduct, it insulates the agency from

the press coverage, congressional attention, Inspector

General complaints, and public advocacy that democratic accountability requires. The constitutional problem

the Court identified in Seila Law and Collins is present

here in a different form and equally demands this

Court’s attention.

II. The Constitutional Question Is Genuinely

Unresolved, and the Ninth Circuit’s Analysis

Is Demonstrably Incomplete.

This Court grants certiorari to resolve questions

of constitutional law that are both unsettled and of

substantial national importance. S. Ct. R. 10. This

case presents both. The constitutional status of Rule

202.5(e) has never been subjected to scrutiny the First

Amendment demands. The Ninth Circuit upheld the

rule without applying prior restraint doctrine, without

applying strict scrutiny, and without answering the

durational question the rule most urgently poses.

Instead, the court avoided the constitutional questions

by applying the balancing framework laid out in Town

of Newton v. Rumery, 480 U.S. 386 (1987), concluding

that the constitutional rights at stake under Rule

202.5(e) may be waived if done so voluntarily, with

knowledge, and the individual had the capacity to do

so. Powell v. United States Securities and Exchange

Commission, 149 F.4th 1029 (9th Cir. 2025). The Ninth

Circuit erred on two points. First, under the Rumery

framework, the SEC gag rule does not allow for “voluntary” waiver of First Amendment rights for many

defendants, making a substantial amount of those

“waivers” invalid. Second, the court failed to analyze

13

the gag rule as a prior restraint, which would show

that the Gag rule is facially invalid.

A. The Voluntariness of Settlement is a

Fiction for Many SEC Defendants Constituting an Invalid Waiver of First

Amendment Rights.

In Town of Newton v. Rumery, 480 U.S. 386 (1987),

this Court held that agreements waiving the right to

pursue civil claims are enforceable only if they satisfy

a case-specific balancing test. Courts must determine

whether the waiver was entered into voluntarily, deliberately, and with full awareness of the rights relinquished, and whether enforcement would be consistent

with public policy. Id., at 392. Even where a waiver

appears voluntary, it is unenforceable if the public

interest harmed (such as the suppression of claims

that promote government accountability) outweighs

the benefits of enforcement in the particular case. Id.

The Ninth Circuit’s application of Rumery depends

entirely on the premise that defendants voluntarily

agreed to the gag condition. That premise fails

empirically for a majority of the defendants the rule

reaches. In FY2024, the SEC filed 583 enforcement

actions, of which approximately 86 percent were

brought against non-public-company defendants. U.S.

Sec. & Exch. Comm’n, Press Release 2024-186, SEC

Announces Enforcement Results for Fiscal year 2024

(December 17, 2024), https://www.sec.gov/newsroom/

press-releases/2024-186. In FY2023 it filed 784,

including 501 stand-alone actions of which only 91 were

against public companies—approximately 18 percent.

U.S. Securities and Exchange Commission, SEC

Announces Enforcement Results for Fiscal Year 2023

(November 14, 2023), https://www.sec.gov/newsroom

14

/press-releases/2023-234. The overwhelming majority

of enforcement targets are individuals, private firms,

small investment advisers, and broker-dealers: parties

likely without institutional legal infrastructure, with

no option for a public defender, and likely without the

financial resources to sustain extended federal litigation. SEC enforcement data further reveals that in

FY2017, just 38 cases out of 754, or 5 percent,

generated 62 percent of all penalties collected. In

FY2016, 43 cases out of 868 generated 75 percent of

total recoveries. See Hester Peirce, Speech: Lies,

Statistics, and Enforcement, U.S. Securities and

Exchange Commission (Oct. 26, 2018), https://www.

sec.gov/newsroom/speeches-statements/peirce-speechlies-statistics-102618. The structural implication is

clear: the agency generates the bulk of its enforcement

volume from smaller defendants generating smaller

penalties—defendants who are simultaneously the most

common targets and the most disadvantaged in the

process.

For these smaller defendants, the word “voluntary”

does not describe the reality of settlement. The SEC

investigates for months or years before filing, compiling

a record the defendant cannot access during the investigation. 17 C.F.R. § 202.5 (“[u]nless otherwise ordered

by the Commission, all formal investigative proceedings

shall be non-public); Comments on Proposed Rule:

Amendments to the Commission’s Rules of Practice, 2

(Release No. 34-75976; File No. S7-18-15) (S.E.C.

Misc., 2015); By the time settlement is offered, the

defendant faces a choice between accepting the

boilerplate conditions which includes the lifetime gag

or continuing to litigate before an in-house adjudicator

with compressed timelines, severely limited discovery,

15

no jury right, and an appellate process statistically

more likely to increase sanctions than reduce them.

SEC v. Jarkesy, 603 U.S. 109 (2024) (recognizing the

constitutional asymmetries of SEC administrative

proceedings). There is no option for a public defender

in administrative proceedings, so legal costs accumulate

from the moment a subpoena arrives. See Boruski v.

Securities and Exchange Commission, 340 F.2d 991,

992 (2nd Cir. 1965) (there is no right to appointed

counsel in administrative proceedings); U.S. v. Bloom,

450 F.Supp. 323, 338 (E.D. Penn. 1978). Defendants

who hoped to fight their cases in federal court may

find themselves in administrative proceedings stripped

of the evidentiary tools and procedural protections

they expected. See Priyah Kaul, Admit or Deny: A Call

For Reform of the SEC’s “Neither-Admit-Nor-Deny”

Policy, 48 U. MICH. J.L. REFORM 535 (2015). Under

these conditions, the agreement to a lifetime speech

condition is not a knowing, voluntary, and intelligent

waiver of a fundamental constitutional right.

Therefore, under the unconstitutional conditions

doctrine, the agreement to a lifetime speech prohibition

cannot constitute a valid waiver of First Amendment

rights for a substantial portion of the defendants the

rule reaches. The Constitution requires that waivers

of fundamental rights be knowing, voluntary, and

intelligent. Brady v. United States, 397 U.S. 742, 748

(1970). Where substantial coercive pressure negates

any meaningful exercise of choice, that standard is not

met. The factual record here—compressed timelines,

no right to a public defender, statistically punishing

administrative appeal, and the financial impossibility

of sustained federal litigation for smaller defendants—

establishes that the conditions of settlement are coercive

16

in the constitutional sense, not merely in the colloquial

one.

B. Rule 202.5(e) Functions as a Prior Restraint

in Operation, Regardless of Its Characterization as a Settlement Condition.

The First Amendment strongly disfavors prior

restraints, or government restrictions that prohibit

speech before it occurs, because such measures carry

a “heavy presumption” of invalidity. Near v. Minnesota,

283 U.S. 697, 713–15 (1931); New York Times Co. v.

United States, 403 U.S. 713, 714 (1971) (per curiam).

The SEC will likely characterize Rule 202.5(e) as

a voluntary settlement condition rather than a classic

prior restraint. But the doctrine turns on functional

effect, not formal label. A restriction that prospectively

bars speech without meaningful opportunity for review

operates as a prior restraint, even if framed as a waiver.

Rule 202.5(e) operates in precisely that manner.

It imposes a prospective prohibition on speech that

would deny or cast doubt on the SEC’s allegations, and

it does so as a non-negotiable condition of settlement.

The restriction applies indefinitely, without sunset or

mechanism for reconsideration, and reaches not only

false statements but also potentially truthful or

contextual ones. In practice, defendants must accept

this ongoing speech limitation before resolving the

case, leaving no realistic opportunity to bargain over

its scope.

In these respects, the rule functions as a prior

restraint in operation: it suppresses speech before it

occurs, applies broadly and indefinitely, and lacks

the procedural safeguards that typically accompany

restrictions of this kind.

17

C. The Gag Rule Does Not Survive Strict

Scrutiny—Even in the Best of Circumstances.

When a regulation restricts speech protected by

the First Amendment, it is subject to strict scrutiny,

requiring the government to show that the restriction

is narrowly tailored to serve a compelling interest.

R.A.V. v. City of St. Paul, 505 U.S. 377 (1992); Reed v.

Town of Gilbert, 576 U.S. 155 (2015).

The SEC asserts that Rule 202.5(e) preserves its

ability to litigate if a settling defendant later publicly

denies the allegations. Even accepting that interest,

the rule appears difficult to reconcile with strict scrutiny.

First, it is not narrowly tailored. The rule prohibits not only false statements but also truthful ones,

applies indefinitely rather than for the duration of any

litigation risk, and extends beyond formal denials to

any statement that might “indirectly” cast doubt on the

SEC’s allegations. 17 C.F.R. § 202.5(e). That sweeping,

perpetual restriction far exceeds what would be necessary to preserve any legitimate litigation interest.

Second, the asserted interest is not compelling.

The First Amendment does not permit the government

to suppress speech simply to avoid criticism of its

own enforcement conduct. See New York Times Co. v.

Sullivan, 376 U.S. 254, 270 (1964).

Third, less restrictive alternatives are readily

available. The SEC could pursue case-specific limitations, target demonstrably false statements, or rely on

existing remedies such as defamation law. The availability of these alternatives underscores that the rule

is not narrowly tailored and suggests that its function

18

is to suppress criticism rather than preserve litigation

options.

CONCLUSION

Congress spent decades building a legal architecture premised on the principle that the government

bears the burden of justifying secrecy. The Freedom of

Information Act, the Government in the Sunshine Act,

and the Open Government Act each reflect the same

foundational judgment: information about how federal agencies exercise sovereign power belongs to the

public. Rule 202.5(e) is an unauthorized inversion of

that judgment that is against public policy. Transparency is the foundation of legitimacy. Allowing the

government to suppress the “other side” of a story

prevents the public from having honest conversations

about whether a law or agency is actually working. This

opacity does more than limit public discourse; it alters

the constitutional balance between the governed and

those who govern. By suppressing the only firsthand

accounts capable of testing its enforcement narrative,

the SEC effectively insulates itself from the mechanisms

of democratic accountability that Congress designed

to constrain administrative power. The result is not

merely a restriction on speech, but a structural

distortion—one that permits the agency to exercise its

authority without the transparency necessary for

meaningful oversight by the public, Congress, or the

courts.

Rule 202.5(e) presents constitutional questions of

national importance that remain genuinely unresolved.

19

The Ninth Circuit upheld the rule without applying

prior restraint doctrine, without applying strict scrutiny,

and while expressly reserving the constitutional question

the rule most urgently poses. It applied a balancing

framework designed for narrow, time-limited plea

arrangements to a permanent, categorical, agencywide speech prohibition, and in doing so left standing

a rule that suppresses truthful criticism of government

enforcement conduct for hundreds of defendants each

year: most of them individuals and small businesses

with no realistic alternative to settlement and no

public voice once silenced.

For these reasons, the petition for a writ of certiorari

should be granted.

Respectfully submitted,

/s/ Ondray T. Harris

Ondray T. Harris

Counsel of Record

Marin Murdock

COMPETITIVE ENTERPRISE INSTITUTE

1310 L. Street NW, 7th Floor

Washington, D.C. 20005

(202) 331-2265

ondray.harris@cei.org

Counsel for Amicus Curiae

April 20, 2026