US appeals court rejects challenge to SEC ‘gag rule’

(Reuters) -A federal appeals court on Wednesday rejected a challenge to a U.S. Securities and Exchange Commission rule that reflects the agency’s policy not to settle civil enforcement actions unless the defendants agree not to publicly deny the allegations they face.

The 9th U.S. Circuit Court of Appeals said the “gag rule” was not unconstitutional on its face, though it could violate the First Amendment if applied in a manner that prevented civil enforcement defendants from criticizing the agency.

(Reporting by Jonathan Stempel in New York, Editing by Franklin Paul)