Supreme Court shoots down challenge to SEC 'gag orders' that was backed by Elon Musk, Mark Cuban

• The Supreme Court won't hear a case challenging SEC gag orders brought by a former Xerox executive.
• Elon Musk and Mark Cuban filed an amicus brief in support of the challenge in April.

The Supreme Court won't hear a challenge to a case about the US Securities and Exchange Commission's ability to impose a gag order, a court order list released Tuesday said.

The SEC has been able to impose a gag rule on anyone who settles a civil suit with them since 1972, and Reuters reported in April that the case the Supreme Court shot down ties back to a 2003 case involving former Xerox executive Barry Romeril.

Romeril, along with five other former Xerox executives, agreed to pay $22 million in 2003 to settle SEC fraud allegations connected to using unapproved accounting devices to accelerate Xerox's revenue and pre-tax earnings. As part of the settlement, the executives did not admit or deny the SEC's allegations.

By 2019, Romeril asked the Us District Court for the Southern District of New York to overturn the gag rule that was imposed as a part of that settlement because he wanted to speak out about his case, Reuters reported.

The district court rejected Romeril's challenge, and the rejection was upheld by a second circuit panel in 2021.

In March, Romeril challenged the case with the Supreme Court. He argued that the gag rule was a "sweeping restriction on freedom of speech," Reuters reported. The New Civil Liberties Alliance now represents Romeril.

Mark Cuban and Elon Musk have voiced support in challenging the gag rule, urging the Supreme Court in April to hear the case, Reuters reported.

The pair, along with two hedge funds managers and the Investor Choice Advocates Network, filed an amicus brief to the Supreme Court urging them to hear Romeril's challenge.

There is "no compelling public policy reason to enforce SEC 'gag orders' against defendants who settle with the SEC," they wrote in the brief, according to Reuters.

"In fact, the opposite is true," they wrote, Reuters reported. "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," they added. "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."

The Supreme Court's decision on Tuesday to not hear Romeril's case means the SEC's gag order will remain in place.