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NCLA’s Eight-Year Fight Spurs SEC Proposal to Alter Unconstitutional Gag Rule Censoring Americans
Thomas J. Powell, et al. v. Securities and Exchange Commission
Washington, D.C., May 11, 2026 (GLOBE NEWSWIRE) -- With the New Civil Liberties Alliance urging the Supreme Court to hear the Powell, et al. v. Securities and Exchange Commission case against SEC’s unconstitutional “Gag Rule,” the agency is now taking action to alter the policy after more than 50 years. In place since 1972, the Gag Rule forbids every American who settles a regulatory enforcement case with SEC from even truthfully criticizing their cases in public for the rest of their lives. NCLA is pleased to see SEC move in this direction, having fought the Gag Rule at every turn for nearly a decade as a blatant violation of the First Amendment. Representing several individual Americans censored by the Gag Rule, and two media outlets that want to tell their stories, NCLA will keep pursuing its Supreme Court lawsuit to ensure those already silenced by this indefensible rule can speak freely going forward.
The Gag Rule restrains NCLA clients Thomas Powell, Cassandra Toroian, Gary Pryor, Joseph Collins, Michelle Silverstein, Rex Scates, Ray Lucia, Barry Romeril, Christopher Novinger, and thousands other people nationwide from sharing even truthful speech. It also prevents NCLA clients Reason Magazine and the Cape Gazette from reporting both sides of SEC settlements. The First Amendment explicitly forbids Congress from abridging Americans’ freedom of speech or press. Yet the SEC, a mere agency, claims power Congress itself lacks.
The pending Supreme Court cert petition is just the latest step in NCLA’s eight-year-long battle against the Gag Rule. NCLA originally petitioned SEC to end the Gag Rule in October, 2018. The firm then led multiple lawsuits against it, including a previous Supreme Court trip, and renewed the petition in 2023. SEC denied the petition in January 2024. NCLA then launched the Powell lawsuit asking the U.S. Court of Appeals for the Ninth Circuit to correct that error. After the Ninth Circuit failed to overturn the Gag Rule, NCLA ultimately filed a petition this March asking the U.S. Supreme Court to hear Powell and end SEC’s unconstitutional policy once and for all.
SEC’s apparent intent to eliminate the Gag Rule leaves important questions unanswered. It is uncertain if NCLA’s clients and other Americans who have been silenced by the Gag Rule will have their speech restrictions lifted, or whether SEC is only eliminating the policy for future settlements.
NCLA released the following statements:
“It is both surprising and encouraging that the SEC seeks to fix its 54-year reign of error in coercing gags from those with whom it settles. Given NCLA’s pending cert petition at the U.S. Supreme Court in Powell v. SEC, one cannot help wonder: is SEC just trying to evade a binding Supreme Court ruling that the Gag is unconstitutional?”
— Peggy Little, Senior Litigation Counsel, NCLA
“After eight years of fighting them at every turn, NCLA is glad to see SEC finally admitting its Gag Rule is indefensible. However, what revisions it is proposing to the Rule are not yet public. And there is a risk the agency could take half-measures that would not resolve the First Amendment problem.”
— Mark Chenoweth, President and Chief Legal Officer, NCLA
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.
Joe Martyak New Civil Liberties Alliance 703-403-1111 joe.martyak@ncla.legal
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