Cato Institute v. Securities and Exchange Commission, No. 20-5054 (D.C. Cir. 2021)Annotate this Case
Defendants who enter into SEC consent decrees gain certain benefits: they may settle a complaint without admitting the SEC’s allegations, and often receive concessions. The SEC does not permit a defendant to consent to a judgment or order that imposes a sanction while denying the allegations, 17 C.F.R. 202.5(e)). Cato alleged that SEC defendants are, therefore, unable to report publicly that the SEC threatened them with unfounded charges or otherwise coerced them into entering into consent decrees, impermissibly stifling public discussion of the SEC’s prosecutorial tactics. Cato has not entered into any SEC consent decree but alleges that it has contracted to publish a manuscript written by someone who is subject to such a consent decree and has been contacted by other such individuals, who would otherwise participate in panel discussions hosted by Cato on the topic of the SEC’s prosecutorial overreach, and allow Cato to publish their testimonials.
Cato’s complaint invoked the First Amendment and the Declaratory Judgment Act. The D.C. Circuit affirmed the dismissal of Cato’s complaint for lack of standing. Cato’s alleged injury is not redressable through this lawsuit; the no-deny provisions that bind the SEC defendants whose speech Cato wishes to publish would remain unable to allow Cato to publish their speech, given their consent decrees.