Thursday, August 27, 2015

Is The SEC Violating Public Company Commercial Free Speech Rights By Regulating Interim Operating Results Disclosure?

My posted comment to The Wall Street Journal, "Let Tim Cook Speak (About Business): Apple’s CEO becomes a target of regulatory action for reminding investors that the real world exists." by Holman W Jenkins, Jr:
When the SEC was created in the 1930s, our free speech rights were more limited and government was allowed to enact laws restricting free speech. It is really only since the 1960s that our current view of expansive free speech was approved by the US Supreme Court.

In 1976, the US Supreme Court said commercial speech has first amendment protection and in 1980, the court set out a four part test when commercial speech can be regulated.

A first amendment challenge to laws and SEC rules limiting public companies from disclosing material information about their current operating results, which are necessary for the real-time accurate pricing of publicly traded securities, would give the US Supreme Court a chance to balance the rights of investors to have current and timely information to price securities against the government's right to delay disclosure for market regulatory reasons. A court could easily find that the SEC has overreached and its disclosure prohibitions are too broad.