Romeril v. SEC

April 22, 2022 | Brief for Amicus Curiae Due Process Institute in Support of Petitioner

April 22, 2022 | Brief of Amicus Curiae Thomas More Society in Support of Petitioner

April 22, 2022 | Brief of Constitutional Law & First Amendment Scholars as Amici Curiae in Support of Petitioner

April 22, 2022 | Brief of Amicus Curiae Pelican Institute for Public Policy In Support of Petition for a Writ of Certiorari

April 22, 2022 | Brief of Mark Cuban, Phillip Goldstein, Elon Musk, Nelson Obus, and Investor Choice Advocates Network as Amici Curiae in Support of Petitioner

April 22, 2022 | Brief of Hamilton Lincoln Law Institute as Amicus Curiae in Support of Petitioner

April 22, 2022 | Brief of the Competitive Enterprise Institute, Cato Institute, Institute for Justice, and Institute for Free Speech as Amici Curiae Supporting Petitioner

April 17, 2020 | Brief of the Competitive Enterprise Institute as Amicus Curiae in Support of Defendant-Appellant

April 17, 2020 | Brief for Amicus Curiae Americans for Prosperity Foundation in Support of Defendant-Appellant

April 16, 2020 | Brief for Amici Curiae Alan Garfield, Burt Neuborne, Clay Calvert, Rodney Smolla, Reason Foundation, the Goldwater Institute, the Institute for Justice, and the Pelican Institute for Public Policy in Support of Defendant-Appellant

April 10, 2020 | Appellant’s Opening Brief and Statutory Addendum

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November 18, 2019 | U.S. District Court for the Southern District of New York Opinion and Order Denying Defendant’s Motion for Relief from the Judgment

Romeril argues that a no-deny provision in the Consent, which was incorporated into an Order of Final Judgment (“Judgment”), violates the First Amendment by forbidding him from publicly denying allegations in the SEC complaint. Romeril’s motion is untimely and, in any event, fails to allege a jurisdictional defect or violation of due process that would permit relief under Rule 60(b) (4).

May 6, 2019 | Memorandum In Support of Motion For Relief From Judgment

PRELIMINARY STATEMENT

Movant Barry D. Romeril moves pursuant to Fed. R. Civ. P. 60(b)(4) for relief from the final judgment’s prohibition of his future truthful speech about this case. Paragraph 11 of the Consent of Barry D. Romeril (“Consent”) incorporated into the final judgment is void because it is an unconstitutional prior restraint and a content-based restriction on speech that violates the First Amendment of the U.S. Constitution, and for other reasons more fully set forth below. An Amended Consent Order omitting the offending gag provision has been submitted as part of this Motion.

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May 6, 2019 | Motion for Relief from Judgment

Defendant Barry D. Romeril hereby moves pursuant to Fed. R. Civ. P. 60(b)(4) for relief from Judgement entered on June 16, 2001 as incorporating a void and unconstitutional prior restraint on speech in violation of the First Amendment of the United States Constitution and controlling Second Circuit case law, and for other reasons more fully set forth in the memorandum of law that accompanies this motion.

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July 5, 2019 | Reply Memorandum of Law in Support of Motion for Relief from Judgment Pursuant to Fed. R. Civ. P. 60(b)(4)

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October 30, 2018 | Petition to Amend: SEC Rule Imposing Speech Restraints in Consent Orders

In re SEC Rule Imposing Speech Restraints in Consent Orders

The SEC Rule adopts “the policy that in any civil lawsuit brought by it or in any administrative proceeding of an accusatory nature pending before it, it is important to avoid creating, or permitting to be created, an impression that a decree is being entered or a sanction imposed, when the conduct did not, in fact, occur.” Accordingly, SEC will “not … permit a defendant or respondent to consent to a judgment or order that imposes a sanction while denying the allegations in the complaint or order for proceedings”—although at the same time the SEC
provides that the defendant or respondent may state “that he neither admits nor denies the allegations.” 17 C.F.R. § 202.5(e).

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PRESS RELEASE

April 25, 2022 | Prominent 1st Amendment Scholars, Investors and Think Tanks Support NCLA’s SCOTUS Cert Petition

Washington, DC (April 25, 2022) – Prominent Constitutional Law and First Amendment scholars, including former ACLU president Nadine Strossen, American investors and entrepreneurs Elon Musk, Mark Cuban, Philip Goldstein, and Nelson Obus, and ten liberty-minded organizations, have filed amici curiae briefs in support of the arguments presented by the New Civil Liberties Alliance in Barry D. Romeril v. Securities and Exchange Commission. NCLA, a nonpartisan nonprofit organization, filed a petition for a writ of certiorari in March asking the Supreme Court to review SEC’s rule that any settlement with it must include a lifetime restraint on speech.

The lawsuit challenges the constitutionality of the U.S. Securities and Exchange Commission’s “gag orders” that have silenced thousands including the petitioner in this case, former Xerox Chief Financial Officer Barry Romeril. As a result of SEC’s gag policy, Mr. Romeril has been unable fully to discuss his case publicly for over 18 years. The decree embodying SEC’s demands is an unconstitutional prior restraint, a sort of order the Supreme Court has described as “the most serious and the least tolerable infringement on First Amendment rights.”

Twenty amici curiae have filed seven total amicus briefs in support of Mr. Romeril and against SEC’s gag rule.

NCLA released the following statement:

“For 50 years, SEC has leveraged its enormous power to impose crushing defense costs to silence for life any target’s criticism of the agency. These eloquent amici lay out shocking examples of the Gag’s role in permitting SEC to prosecute innocent parties and hide other agency misconduct. They expose that SEC’s Gag creates a misbegotten scheme by which the government, despite the First Amendment, silences speech even private parties would not dare to attempt. Finally, amici peel back the procedural and substantive contortions of the decision below that effectively overruled its own precedents and jettisoned binding Supreme Court doctrine.”
— Peggy Little, Senior Litigation Counsel, NCLA

Excerpts from the seven briefs amici curiae submitted in support of NCLA:

“SEC wields enormous influence and power by using consent orders … [in] approximately 98% of its enforcement cases … [Its] Gag Rule is not just any prior restraint, but a prior restraint on “steroids,” fatally infected by content and viewpoint discrimination … exacerbated by its practical operation as an in terrorem ‘gun to the head,’ forcing submission by any who attempt resolution of disputes with the Commission.”
— Constitutional Law and First Amendment Scholars Rodney A. Smolla, Clay Calvert, Alan E. Garfield, Burt Neuborne, Nadine Strossen and Eugene Volokh filed by the Atlantic Legal Foundation

“SEC should welcome scrutiny of its allegations, particularly unproven allegations in settled cases, to ensure that justice is done and any shortcomings in its cases are publicly aired … SEC’s insistence on secrecy in connection with its settlements serves no compelling purpose, runs contrary to the SEC’s mission, and harms the very markets the SEC is charged with protecting.”
— Mark Cuban, Philip Goldstein, Elon Musk, Nelson Obus and Investor Choice Advocates Network

“A more obvious attempt to suppress public criticism of government officials could scarcely be imagined. … The gag orders eviscerate one of the last checks on the Commission’s power: speech capable of generating public outrage and calls for reform. … This extreme, unprecedented level of insulation from ‘political accountability’ poses a serious threat to ‘individual liberty,’ warranting this Court’s immediate attention.”
— Competitive Enterprise Institute, Cato Institute, Institute for Justice and Institute for Free Speech

“There is no legitimate public interest in suppressing otherwise protected speech simply because it criticizes or embarrasses the government. … “The right to ‘examin[e] public characters and measures through free communication may be no less than the ‘guardian of every other right.’ (quoting Madison’s Report on the Virginia Resolutions (1800)). Open discussion of criminal enforcement, prosecution, and settlement practices undertaken by government agencies is of the utmost public importance and cannot be fairly conducted with one side silenced.”
— Hamilton Lincoln Law Institute

“While at odds with America’s traditional First Amendment principles, the SEC’s Gag Rule is perfectly consistent with the unfortunate tendency of government bureaucracies to use secrecy as a means to increase their own power at the public’s expense. With its Gag Rule, the SEC effectively monopolizes the power to tell the story of how it is exerting its powers.”
— The Thomas More Law Society

“Anyone who has experienced a swarm of federal agents investigating their workplace for suspected securities law violations could tell how inherently intimidating and one-sided an SEC investigation can feel. Now imagine a foreman of that posse essentially proposes that their investigators will end their work in exchange for a financial settlement and execution of a promise never to speak of the circumstances or raise concerns … to a federal judge.”
— The Due Process Institute

“If the panel had grappled with the First Amendment issues present in this case instead of distinguishing Crosby on dubious grounds, it would have concluded that the No-Deny Provision is unconstitutional … [and] a prior restraint. … This Court has never upheld (1) a lifelong, content-based waiver of First Amendment rights (2) secured by the government (3) that lacks a compelling government interest. … The Court should grant certiorari.”
— The Pelican Institute for Law and Public Policy

For more information visit the case page here.

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

March 21, 2022 | NCLA Petitions Supreme Court to End Decades-Long Suppression of Free Speech by SEC Gag Order

Washington, DC (March 21, 2022) – Settling defendants whom the Securities and Exchange Commission (SEC) has muzzled for decades might get a chance at finally having their voices heard. Today, the New Civil Liberties Alliance filed a petition for a writ of certiorari with the U.S. Supreme Court in Romeril v. SEC, seeking a review of the constitutionality of SEC’s “gag orders,” which the Commission requires in virtually all settled cases.

As a result of SEC’s gag policy, Petitioner Barry Romeril, who reached a no-admit-no-deny settlement with the Commission in 2003, has since been unable to discuss his case publicly. Mr. Romeril, who formerly served as Chief Financial Officer at Xerox, desires to speak truthfully about SEC’s case and offer his opinions about the proceedings against him. However, because he does not want to violate an SEC Order that was transformed into a binding federal court order—nor even risk doing so—he has refrained from making statements that might be deemed to “create an impression” that the Complaint in his case lacked a factual basis or was without legal merit.

In the decades since it issued the Gag Rule in 1972, SEC has commenced and settled thousands of cases with judgments containing a lifetime restraint on speech barring the settling defendant from ever even “indirectly” leaving the “impression” that “any allegation” in the agency’s original complaint is “without factual basis.” No act of Congress authorizes, or ever could authorize, such a sweeping speech restriction. This unlawful mechanism allows SEC to obtain something as the price of settlement that it could never win at trial—the coerced silence of the thousands of defendants with whom it settles.

The limitation on Mr. Romeril’s ability to criticize the SEC abridges his freedom of speech. It is a quintessential prior restraint, described by the Supreme Court as “the most serious and the least tolerable infringement on First Amendment rights.” Moreover, the lifetime nature of the ban, its application to wholly truthful speech, and its content-and viewpoint-discrimination (permitting praise but not criticism of SEC) also violates First Amendment precedent. It is hard to conceive of a better mechanism to systematically silence a powerful agency’s critics.

Additionally, the Gag Rule violates the due process of law by requiring defendants to waive their constitutional rights if they settle with the agency, including rights to be heard on the Consent agreement, rights to notice of what speech would violate the Gag Order, and the right to freely share their views of the administrative process they endured at the end of the government’s proceedings.

SEC has no lawful—much less compelling—interest in suppressing speech critical of its settled enforcement actions. Orders such as the one imposed on Mr. Romeril stifle public debate and deprive the public of useful information. They require defendants to make the difficult choice to surrender their rights to speak out or to forgo consent settlements with the Commission and face the potentially ruinous costs and risks of litigating to the bitter end. SEC’s speech ban has already silenced Mr. Romeril for 18 years. Unless the Supreme Court grants cert. and determines the Gag Rule is unconstitutional, that ban will continue to silence him for the rest of his life.

NCLA released the following statements:

“The Constitution forbids Congress itself from enacting prior restraints, the most serious and least tolerable First Amendment violations. SEC’s successful effort to self-confer such power by an unlawful rule must end. The agency’s profoundly dangerous ‘gag rule’ scheme systematically silences criticism of the SEC by those who know its shortcomings best. The Supreme Court should grant cert. and fulfill its duty to ensure that administrative agencies—and the courts—abide by the Constitution.”
— Peggy Little, Senior Litigation Counsel, NCLA

“SEC has often described its mission and vision as seeking to increase public trust and promote transparency in the markets and its regulation thereof. But the unlawful and coerced silencing of individuals and businesses has hampered public discourse for decades now about how the Commission might better conduct its enforcement efforts. It is past time for this unconstitutional practice to stop.”
— Kara Rollins, Litigation Counsel, NCLA

For more information visit the case page here. Watch the case video here.

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November 15, 2021 | NCLA Seeks En Banc Review of First Amendment SEC Gag Rule Case in Second Circuit

Washington, DC (November 15, 2021) – The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, is seeking en banc review in U.S. Securities and Exchange Commission v. Barry D. Romeril. NCLA filed a petition with the U.S. Court of Appeals for the Second Circuit Friday to address whether courts have the power to uphold prior restraints on speech as a non-negotiable condition of settlement of U.S. Securities and Exchange Commission (SEC) allegations.

In September, a Second Circuit panel denied former Xerox Chief Financial Officer Barry Romeril’s motion for relief from a “gag order” SEC imposed on him in 2003. In doing so, the Court became complicit in an ongoing First Amendment violation. Mr. Romeril reached a settlement with SEC in 2003 after the agency filed a complaint alleging violations of federal securities law. The SEC requires as a condition of settlement that all defendants agree that they will neither deny nor “create an impression” that they deny any allegations SEC has made against them—even ones that SEC knows at the time of settlement it could not prove. Mr. Romeril faces the threat of renewed prosecution if he speaks up because the court-approved final judgment incorporated the terms of this “consent” to a gag with SEC.

The Second Circuit’s ruling was untroubled by such “consents,” reasoning that courts routinely enforce individuals’ agreements to waive their constitutional rights. But the panel failed to recognize that whereas waiver of rights to a jury trial or an appeal are intrinsically part of settling cases, the right to engage in truthful free speech is not at issue in any SEC enforcement action, win or lose. NCLA contends that the gag order is a content-based restriction of speech, a forbidden prior restraint, and that it gives the SEC unbridled enforcement discretion by silencing Mr. Romeril in perpetuity.

The panel decision in this case should have been simple because a prior decision of the Second Circuit in Crosby v. Bradstreet Co. had forbidden courts to enter such unconstitutional prior restraints even between private parties. This same principle applies with far greater force when, as in Mr. Romeril’s case, the government demands silence as a non-negotiable condition of settlement of allegations in a civil SEC complaint. The panel’s contrary ruling created an intra-circuit split which the full Court must decide, under the Court’s own rules, sitting en banc.

The question raised in this appeal has an enormous individual and collective impact on Americans’ civil liberties because SEC settles 98% of its cases. In Mr. Romeril’s settlement, the First Amendment violation occurred 18 years ago and is repeated each day since then. Mr. Romeril desires to engage in truthful public statements concerning SEC’s case against him but is prevented from doing so. As briefed to the Court by several First Amendment scholars and public interest groups, the practice of demanding gags is a content-based prior restraint on speech, an unconstitutional condition, and a denial of due process that operates against the public’s interest in knowing how its government operates, which is core protected speech.

NCLA released the following statement:

“SEC’s requirement that anyone who wishes to settle charges against them may never even question any allegations SEC made in perpetuity is the sort of thing you might expect in a totalitarian regime, not a country with a proud heritage of free speech. It is long past time for the SEC’s outlier, unlawful, and unconstitutional fifty-year reign of imposing silence on Americans to end.”
— Peggy Little, Senior Litigation Counsel, NCLA

For more information visit the case page here.

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September 27, 2021 | Second Circuit Decision in SEC Gag Rule Case Fails to Address Unconstitutionality of Lifetime Gags

Washington, DC (September 27, 2021) – Today, a three-judge panel of the U.S. Court of Appeals for the Second Circuit incorrectly denied the motion for relief from judgment in the case of former Xerox Chief Financial Officer Barry Romeril. Mr. Romeril had argued that a lifetime “gag order” imposed on him in 2003 by the U.S. Securities and Exchange Commission (SEC) is unlawful and violated his First Amendment rights.

The New Civil Liberties Alliance believes the court not only erred in its decision, but also failed to address many of Mr. Romeril’s key arguments. For example, the court did not tackle arguments that the gag rule violated the Administrative Procedure Act from its inception, that it ignores the public’s right to hear the verboten speech, that it is a forbidden content-based restriction on speech, an unconstitutional condition that operates in perpetuity, and that it implicates the judiciary in unconstitutional orders. The gag order also denies due process of law by prohibiting those who settle with the SEC from speaking freely about their cases, something that the U.S. Supreme Court and other federal courts have said both convicted murderers and disciplined judges have every right to do. The notion that Mr. Romeril somehow bargained away his right to speak misses the fact that his silence was not something the Government could have won as a penalty in the case. Mr. Romeril raised all these issues in his case; unfortunately, the panel failed to address them.

For nearly 50 years, SEC has created deals like Mr. Romeril’s that violate the First Amendment rights of powerless defendants. It was not until recently that NCLA shined a light on the Gag Rule and its manifold and glaring unconstitutional infirmities. A rule that racks up a list of constitutional and legal violations this lengthy should compel appellate courts to safeguard Americans’ civil liberties. Instead, the Second Circuit narrowly construed circuit precedent on prior restraints of speech, which courts lack power to enter even upon consent.

NCLA released the following statement:

“NCLA commends Mr. Romeril for bravely challenging the Administrative State to right this wrong. SEC’s Gag Rule was unlawful and unconstitutional from the day the agency deceitfully slipped it into the Federal Register as a ‘housekeeping rule’ without notice and comment. The passage of time only multiplies the constitutional injury suffered by defendants who cannot settle with SEC unless they agree to a lifetime gag that a court has no power to enter. Other federal agencies do not require gags, nor do courts enter them in cases brought by other agencies. NCLA is committed to end this anomalous practice that dangerously insulates SEC from criticism by those in the best position to point out flaws in the agency’s enforcement practices.”
— Peggy Little, Senior Litigation Counsel, NCLA

For more information visit the case page here.

ABOUT NCLA

October 1, 2020 | NCLA Launches Video of Former Chief Financial Officer of Xerox Silenced for Life by SEC’s Gag Rule

Washington, DC (October 1, 2020) – Imagine being charged by a federal government agency and then silenced for life and unable to tell your side of the story. For nearly 50 years, the Securities and Exchange Commission (SEC) has imposed a Gag Rule on defendants that silences them for life when they settle with the agency. The gag forbids even truthful speech if it contradicts anything in the SEC’s original, unproven complaint.

A video released today by the New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, brings this abuse of power by the SEC to light. Former Xerox Chief Financial Officer Barry D. Romeril settled with the SEC over 17 years ago—and he deeply regrets that SEC compelled his silence all these years as a condition of settlement. The video release is part of NCLA’s “End Gag Rules” campaign asking the public to sign a petition calling for an end to this unlawful SEC practice.

Mr. Romeril is challenging the constitutionality of such a gag imposed on him by the SEC in a 2003 settlement and consent order. The video reveals numerous aspects of the unconstitutional Gag Rule, which interferes with the general public’s right to receive full information about cases, prevents the public from keeping tabs on enforcement practices at the agency, and precludes Mr. Romeril from exercising his right to free speech and petition.

NCLA petitioned the SEC in October 2018 to repeal the unlawfully enacted Gag Rule. But two years later, the agency has yet to respond or take any action on the matter, despite tough questioning on the constitutionality of this practice in a Senate Banking Committee hearing in December of 2018.

Read full case summary here.

Excerpts from the video:

“Not being able to speak feels like you’re literally muzzled. I settled because I wanted to move on. The alternative was a long, potentially costly, and very indeterminate process. It takes a toll not only on myself, but my family and friends.”

— Defendant, Barry D. Romeril

“Congress itself could not enact a law that required Americans settling their cases with the government to remain silent about them. Surely, the SEC cannot do by rule what even Congress cannot do by statute.”

— Peggy Little, Senior Litigation Counsel, NCLA

“Seventeen years of enforced silence is too much. No American should be prohibited from speaking about the facts of their case no matter what they’ve been charged with. It’s time for courts to put an end to this unlawful practice.”

— Mark Chenoweth, Executive Director and General Counsel, NCLA

ABOUT NCLA

— Competitive Enterprise Institute (CEI)

July 31, 2020 | NCLA Slams SEC’s Defense of Gag Rule that has Hoodwinked Americans for Half a Century

Washington, DC (July 31, 2020) – For nearly 50 years, the U.S. Securities and Exchange Commission (SEC) has imposed a Gag Rule that silences people with a lifetime gag enforced through a threat of a reopened prosecution. NCLA client Barry D. Romeril, the former Chief Financial Officer of Xerox, is challenging the constitutionality of such a gag imposed on him by the SEC in a 2003 settlement and consent order.

Today the New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, fired back with a reply brief in Barry D. Romeril v. SEC, countering the agency’s faulty arguments in support of the Gag Rule. Mr. Romeril’s appeal seeks reversal of the district court’s decision to reject his motion for relief from judgment so that he may tell his side of the story publicly. Gag orders interfere with the general public’s right to receive full information about cases, and they prevent Mr. Romeril from exercising his right to free speech and petition.

NCLA’s brief filed in the U.S. Court of Appeals for the Second Circuit details several different ways in which SEC gag orders like this one violate the First Amendment. It also points to the binding circuit precedent in Crosby v. Bradstreet Co., which held that a party subject to an unconstitutional, judicially imposed “prior restraint” on future speech may vacate the gag, even decades later. NCLA argues that the district court erred in its opinion that 14 years is too long to wait to challenge an unconstitutional order. Circuit precedent dictates that motions under Rule 60(b)(4) of the Federal Rules of Civil Procedure may be made “at any time” if the underlying order is void, as it is here.

Ten amici curiae have joined in support thus far.

NCLA released the following statements:

“When SEC brings charges against Americans, it issues an inflammatory press release that too often immediately destroys lives, livelihoods, personal relationships, businesses and reputations. When defendants settle with this powerful agency—as 98% do—SEC demands they never speak publicly about the unproven claims against them. It is far past time for this unconstitutional and unlawful practice to stop. The gag shields the agency from criticism and entrenches a dangerous culture of overcharging Americans who are unable to defend themselves or bring agency abuses to the attention of the public and lawmakers.”

— Peggy Little, Senior Litigation Counsel, NCLA

“SEC is unwilling to accept what is painfully obvious, it cannot restrain truthful speech in perpetuity. SEC presents its demand for silence or devastating litigation as a choice. But, weighed down by the inequities in bargaining power between the SEC and its enforcement targets, such a choice is a false one. It is time for the Court to correct this unconstitutional practice.”

— Kara Rollins, Litigation Counsel, NCLA

ABOUT NCLA

April 21, 2020 | Ten Amici Curiae Join NCLA’s First Amendment Challenge to SEC’s Gag Rule

Washington, DC (April 21, 2020) – The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group would like to thank four (4) prominent First Amendment scholars and six (6) public interest groups who have filed in support of NCLA’s opening brief at the U.S. Court of Appeals for the Second Circuit. The briefs amici curiae urge the Court to decide the case of NCLA client Barry D. Romeril, the former Chief Financial Officer of Xerox, against the U.S. Securities and Exchange Commission (SEC). The appeal seeks reversal of the district court’s decision to deny his motion for relief from judgment and challenges the constitutionality of a gag order the SEC imposed in a 2003 settlement and consent order.

“Since 1972 the SEC, a mere administrative agency, has been imposing gag orders on Americans who settle their cases with the agency. Those gags prohibit people from speaking publicly about their prosecution, or permitting others to speak in a way that even “creates an impression” that they were not guilty of everything the SEC charged them with. The SEC lacks any authority to seek such gags and courts have no power to impose them. These powerful amicus briefs call for prompt correction of an unconstitutional agency practice that has defied the First Amendment and the rule of law for far too long.”

—Peggy Little, Senior Litigation Counsel, NCLA

Excerpts from the three briefs amici curiae submitted in support of NCLA’s opening brief:

“[T]he SEC gag clause prohibits truthful speech and enshrines the SEC’s narrative in perpetuity. That is the antithesis of the rights guaranteed by the First Amendment, and this Court should reject the SEC’s decades-long project to silence criticism of its actions.”

— Americans for Prosperity Foundation (AFP)

“A more obvious attempt to silence a government critic to “avoid creating” a disfavored public “impression” could scarcely be imagined. To Romeril’s door, this ‘wolf comes as a wolf.’ Romeril is not the only one whose doorstep has been darkened by this wolf. For the last forty years, the Commission has systematically coerced ‘thousands’ of defendants into ‘agree[ing]’ to identical gag provisions.”

“[T]he gag provision places the SEC in an ethically unseemly and constitutionally infirm position. To the extent the SEC is seeking to suppress the disclosure of truthful information, its actions come perilously close to trafficking in hush money… The right of citizens to inquire, to hear, to speak, and to use information to reach consensus is a precondition to enlightened self-government and a necessary means to protect it.”

— First Amendment Law Scholars, Rodney Smolla, Burt Neuborne, Alan Garfield, Clay Calvert; Reason Foundation; Institute for Justice; Goldwater Institute; Pelican Institute for Public Policy

ABOUT NCLA

For more information visit us online at NCLAlegal.org.

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April 13, 2020 | NCLA Takes Former Xerox CFO’s Case Against SEC ‘Gag Rule’ to Second Circuit Court of Appeals

Washington, DC (April 13, 2020) – The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, filed its opening brief Friday in the U.S. Court of Appeals for the Second Circuit on behalf of client Barry Romeril, the former Chief Financial Officer of Xerox. The appeal seeks reversal of the district court’s decision to deny his motion for relief from judgment. Mr. Romeril is challenging the constitutionality of a gag order the U.S. Securities and Exchange Commission (SEC) imposed in a 2003 settlement and consent order. He is asking the Court of Appeals to remove the lifetime gag so that he may tell his side of the story publicly.

NCLA argues that the U.S. District Court for the Southern District of New York erred in its decision when it failed to follow circuit precedent in two areas. First, the judge’s decision held that 16 years was too long for Mr. Romeril to wait to challenge his gag. But circuit precedent dictates that motions under Rule 60(b)(4) of the Federal Rules of Civil Procedure may be made “at any time” if the underlying order is void. In Crosby v. Bradstreet, the Second Circuit reversed a court order as an unconstitutional prior restraint on speech—like Mr. Romeril’s—even when the order had been entered 30 years earlier.

Second, the district court decision misconstrued the law applicable to challenges for “voidness” under Rule 60(b)(4). The court denied relief because Romeril supposedly failed to identify a jurisdictional defect or violation of due process that would render the 2003 consent order void. But orders can also be void, as the Crosby precedent shows, for including unconstitutional requirements. So, if Romeril is right that the gag order violates the First Amendment, that alone provides enough reason for the court to void it.

NCLA’s brief details several different ways in which SEC gag orders like this one violate the First Amendment. Government-imposed gag orders are primarily a problem because they are “prior restraints” on speech, that is they prohibit future speech (even if truthful). The gag order against Romeril also unlawfully restricts his speech based on its content; it allows him to say positive things about SEC in praise of its investigation and charges against him, but it does not allow him to say anything critical about SEC’s complaint against him. Gag orders also interfere with the general public’s right to receive full information about the case, and they prevent Mr. Romeril from exercising his right to petition.

The district court also mistakenly disregarded Romeril’s due process claims. The gag order violates the Fifth Amendment guarantee of due process of law because it is unconstitutionally vague and leaves too much up to SEC’s discretion. Finally, and perhaps most egregiously, SEC only issued the gag rule as a ‘housekeeping’ rule back in 1972. Such rules are never supposed to be binding on anyone outside the government, but SEC has been ignoring that inconvenient fact for five decades. NCLA anticipates that several amici curiae will file briefs in support of Mr. Romeril’s appeal at the end of this week.

NCLA released the following statements:

“Constitutional rights are not subject to a statute of limitations. This case involves important questions of First Amendment and due process arising from the SEC’s suppression of speech for nearly 50 years in the 98% of cases that powerful agency settles. Congress itself could not require someone to surrender their First Amendment rights in order to settle a case; a mere administrative agency perforce lacks such authority.”

—Peggy Little, Senior Litigation Counsel, NCLA

“The SEC’s gag rule not only quashes Mr. Romeril’s fundamental rights to speak and petition the government, but also the public’s fundamental right to receive his speech and learn what their government is up to. The disregard of clear and controlling circuit precedent by the court below would leave federal courts complicit in the SEC’s unconstitutional practices. This issue is too important for the Second Circuit not to correct course.”

—Kara Rollins, Litigation Counsel, NCLA

“The SEC has a big problem on its hands. Almost 50 years ago, the agency took a dubious regulatory shortcut and issued its ‘gag rule’ without bothering to go through notice and comment rulemaking. The resulting ‘rule’ should never be binding on anyone outside the government. But the SEC has enforced its gag rule against Barry Romeril for 17 years and against scores, if not hundreds, of other defendants. Now that Romeril has made the court aware of this deficiency, as a matter of due process, courts must not abet the agency’s sharp practice.”

—Mark Chenoweth, Executive Director and General Counsel, NCLA

For more background on this case visit: https://archive.nclalegal.org/romeril-sec/

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May 6, 2019 | NCLA Sues to Overturn SEC’s Unconstitutional ‘Gag Order’ that Never Expires in SEC v Romeril

Washington, DC – The New Civil Liberties Alliance (NCLA) today filed a Motion for Relief from Judgment with the U.S. District Court for the Southern District of New York on behalf of Barry D. Romeril. Mr. Romeril served as the Chief Financial Officer of the Xerox Corporation from 1993-2001. NCLA has asked the court to remove a gag order placed on Mr. Romeril on June 5, 2003 as part of a Consent Order with the Securities and Exchange Commission (SEC) because it violates the First Amendment of the U.S. Constitution. Despite the passage of nearly 16 years, Mr. Romeril continues to be bound by the gag order provision. The Consent purports to permanently forbid him from contesting any of the allegations in the Commission’s Complaint against him, regardless of the accuracy of those allegations or the truth of Mr. Romeril’s remarks. He faces the threat of reopened and renewed prosecution even for truthful speech challenging the allegations. NCLA contends that the Gag Order is a contentbased restriction of speech, a forbidden prior restraint, and that it gives the SEC unbridled enforcement discretion by silencing Mr. Romeril in perpetuity. The SEC’s gag rule was promulgated in 1972 without notice and comment. NCLA petitioned the SEC to amend the rule in October 2018, contending that the Commission lacks the authority to use the Gag Rule because it directly infringes upon the First Amendment rights of Americans and hides the agency’s enforcement practices from public scrutiny.

“SEC Gag Orders are unconstitutional prior restraints that violate Americans’ First Amendment rights and their due process rights. Congress itself could not enact a law that forbade defendants from speaking about the merits of their prosecutions. Surely the SEC cannot do by rule what even Congress cannot do by statute.” —Peggy Little, Senior Litigation Counsel, NCLA

ABOUT NCLA NCLA is a nonprofit civil rights organization founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

For more information visit us online: NCLAlegal.org.

July 8, 2019 | NCLA Asks Court to Overturn SEC’s Lifetime Gag on Free Speech

Washington, D.C., July 08, 2019-The Securities and Exchange Commission’s (SEC) “Gag” Rule is a regulation almost unique to the SEC. Since the Rule was created without notice and comment in 1972, it has managed to impact the freedom of speech of hundreds of Americans. Barry D. Romeril, former Chief Financial Officer of the Xerox Corporation, is one person whom this Rule has silenced for life since he entered into a Consent Order with the SEC in 2003. The New Civil Liberties Alliance (NCLA) has filed a reply memorandum of law in support of its motion for relief from judgment in SEC v. Romeril. Despite the passage of nearly 16 years, Mr. Romeril continues to be bound by the gag order. NCLA has asked the court to remove the gag placed on Mr. Romeril as part of a Consent Order with the SEC because it violates the First Amendment to the U.S. Constitution.

The Consent permanently forbids Mr. Romeril from contesting any of the allegations in the Commission’s original Complaint against him, regardless of the accuracy of those allegations or the truth of his remarks. He faces the threat of reopened and renewed prosecution even for truthful speech challenging the allegations. NCLA argues that the gag order violates the First Amendment both because it is a forbidden prior restraint on future speech and because Romeril had no ability to waive the rights of the public to hear the truth from him about the Xerox case. In addition, the speech ban serves no valid government interest, as the SEC’s wish not to have its enforcement practices criticized is not a legitimate basis for gagging Americans’ speech.

“The Gag Rule has silenced generations of Americans and kept them from criticizing the SEC’s enforcement practices. The idea that a powerful administrative agency may force settling parties to surrender future free speech rights—a form of prior restraint that the First Amendment expressly forbids— requires the Southern District of New York’s prompt correction.” —Peggy Little, Senior Litigation Counsel, NCLA

Separately, NCLA petitioned the SEC to amend the rule in October 2018, contending that the Commission lacks the authority to use the Gag Rule because it directly infringes upon the First Amendment rights of Americans and hides the agency’s enforcement practices from public scrutiny.

ABOUT NCLA
NCLA is a nonprofit civil rights organization founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

For more information visit us online: NCLAlegal.org.

November 18, 2019 |U.S. Courts Must Not Ignore How the SEC Gag Rule Violates Americans’ First Amendment Rights

Washington, DC (November 18, 2019) — Barry D. Romeril is being held hostage by the U.S Securities and
Exchange Commission’s “Gag” Rule—a little-known administrative tool meant to silence people for life
regarding any agency case brought against them. The New Civil Liberties Alliance represents Mr. Romeril, a
former Chief Financial Officer of Xerox, who after more than 16 years is still silenced by a Consent Order
entered into with the SEC in 2003. He is determined to put an end to this unconstitutional practice.
For generations now the SEC has cooked up deals like this that violate the First Amendment. Few other
agencies embrace such a practice, but Americans who settle with the SEC mostly out of fear of fighting this
administrative Goliath are prohibited from engaging in even truthful speech taking issue with flaws in the
SEC’s original complaint.

Mr. Romeril faces the threat of reopened and renewed prosecution if he speaks up. NCLA argues that the gag
order violates the First Amendment both because it is a forbidden prior restraint on future speech and because
Romeril had no ability to waive the rights of the public to hear the truth from him about the Xerox case. In
addition, the speech ban serves no valid government interest, as the SEC’s wish not to have its enforcement
practices criticized is not a legitimate basis for gagging Americans’ speech.

NCLA filed a Motion for Relief from Judgment in May with the U.S. District Court for the Southern District of
New York on behalf of Mr. Romeril asking the court to remove the gag order. Today that motion was denied by
Judge Denise Cote for two main reasons. First, she said that he waited too long to file the motion for relief.
Second, she said that only a jurisdictional problem—something which Mr. Romeril has not alleged—would
justify voiding the judgment against him.

“Judge Cote’s decision comes as a surprise. NCLA is confident that the Second Circuit will ultimately correct the
glaring deficiencies in the court’s ruling. We look forward to a robust challenge to this decision on appeal, especially since
the Second Circuit’s controlling precedent on prior restraints of speech is quite clear.”
—Peggy Little, NCLA Senior Litigation Counsel

“The Constitution does not have an expiration date. Barry Romeril is not trying to overturn the judgment against
him. He merely asks to be allowed to speak the truth about his case after 16 years. Judge Cote’s decision to
keep the gag order in place makes her sadly complicit in the SEC’s ongoing unconstitutional scheme.”
—Mark Chenoweth, Executive Director and General Counsel, NCLA

ABOUT NCLA
NCLA is a nonprofit civil rights organization founded by prominent legal scholar Philip Hamburger to protect
constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and
other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new
civil liberties movement that will help restore Americans’ fundamental rights. For more information visit us
online: NCLAlegal.org.