Identity and Interest of Amici Curiae [1]

Amici are Mark Cuban, Phillip Goldstein, Elon Musk, Nelson Obus, and Investor Choice Advocates Network (“ICAN”). Each of the individual amici is a sophisticated businessperson and investor who has publicly litigated against the United States Securities and Exchange Commission (“SEC”). ICAN is a nonprofit, public interest law firm working to expand access to markets by underrepresented investors and entrepreneurs. Amici have an interest in the outcome of this case because they believe it is important that the public and the market are able to learn of the merits—or lack thereof—of the SEC’s claims against individuals or corporations as well as details about settlement negotiations. In other words, amici appreciate that, absent a compelling reason not present here, enforcement of a “gag order” regarding a settlement agreement between a litigant and the SEC is against public policy. As market participants and adverse parties to litigation with the SEC, amici have a particular interest in fostering the ability of settling defendants to comment on the SEC’s unproven claims and the circumstances that such defendants assert caused them to settle.

Summary of the Argument

The SEC’s prohibition against settling defendants criticizing the SEC’s unproven allegations raises important First Amendment and Due Process Clause issues, as noted by the Petitioner. Amici raise a complementary consideration warranting review: there is no compelling public policy reason to enforce SEC “gag orders” against defendants who settle with the SEC. In fact, the opposite is true. In the statutes and regulations the SEC is responsible for enforcing (and by its own actions, public statements, and admissions), the SEC requires full transparency and disclosure for the benefit of participants in securities markets. There is no compelling justification for the SEC to break from this responsibility and single out for concealment and opacity information from defendants who settle with the SEC. To the contrary, preventing these settling defendants from speaking freely deprives the securities markets of potentially material information and so may harm the very market participants for whose benefit the SEC pursues transparency and disclosure. These important additional considerations weigh in favor of granting the petition.

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