The US Court of Appeals for the Ninth Circuit on Wednesday upheld a Securities and Exchange Commission (SEC) policy prohibiting settlement defendants from publicly denying enforcement allegations.

The court found that the SEC rule is constitutionally permissible despite free speech concerns. The court applied the “voluntary waiver” framework established in the 1987 Supreme Court ruling, Town of Newton v. Rumery . Judges held that the defendants had voluntarily agreed to limited speech restrictions in exchange for settlement benefits, with violations only allowing the SEC to seek court-approved reopening of proceedings, rather than automatic penalties.

The court determined that there was a “sufficient nexus” between the government’s interest in proving allegations and defendants waivi

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