When gag rules stifle business reporting

Seth Stern of the Freedom of the Press Foundation writes about how regulatory agency gag rules hurt business reporting.

Stern writes, “You might ask, how can a relatively obscure 1972 rule from a financial regulator be awful enough to bring together such strange bedfellows? Let me explain.

“The ‘gag rule’ requires defendants who settle enforcement actions brought by the SEC to give up their right to publicly maintain their innocence or contradict the SEC’s allegations against them, including to the press.

“The Commodity Futures Trading Commission, the SEC’s counterpart in regulating the commodities industry, enforces its own version of the rule. That means the press has to cover financial regulators — whose missteps have been known to occasionally crash the global economy — with a hand tied behind its back.

“The gag rule is what the courts call a ‘prior restraint’ — the ‘most serious’ First Amendment violation. It expressly targets viewpoints the government dislikes — those of its critics. The SEC’s own justification is that ‘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 alleged did not, in fact, occur.'”

Read more here.