SEC Commissioner Hester Peirce expressed her disapproval with the agency's denial of a petition to amend a rule barring defendants from denying any claims in settlement enforcement proceedings.
According to an official statement from the commissioner, known in the digital assets community as “Crypto Mom,” prohibiting the accusers’ denials prevents the American public from criticizing the government and assessing its credibility.
SEC Denies Petition to Modify Gag Rule
The gag rule is part of an SEC policy adopted in 1972, which requires defendants to agree not to take any action or make public statements denying any allegations in complaints against them.
In essence, the rule does not permit defendants to agree to a judgment or order imposing a sentence while denying the allegations of the complaint; Otherwise, the SEC can ask the court to vacate the settlement. This is to ensure that they do not create the impression that complaints are unfounded.
Pearce explained that the outcome of the rule is for a defendant to agree to set aside previous statements in court challenging the truth of the regulator's claims, promising never to do so or allowing others to challenge the accusations until the case remains resolved.
The petition, filed by the New Civil Liberties Alliance (NCLA), asked the agency to amend the rule to allow a defendant to agree to a ruling in which he admits, denies, or neither admits nor denies the allegations in the complaint.
However, the SEC denied the petition on the grounds that NCLA's arguments had no merit and that the gag rule was “an appropriate exercise of the Commission's authority to decide how to pursue its executive mission and settle cases.”
Undermining organizational integrity
Despite the SEC's claims, Crypto Mom thinks otherwise.
“I agree with the petitioner that this issue demands a place on our rule-making agenda. One of the things I love about this country is that Americans can criticize their government, and often do… The freedom to speak out against the government and government officials is essential in a committed free society.” With the superiority of the people.
The commissioner insisted that the policy of denying defendants the right to publicly criticize the settlement after it was signed undermines regulatory integrity and raises First Amendment concerns.
