The Financial Derivatives Regulatory Authority, or CFTC, decided to abolish a thirty-year-old rule that prevented stable parties from defending themselves publicly. According to the agency’s announcement on Wednesday, the 1998 gag rule will be rescinded immediately upon publication in the Federal Register.
Previous criticism from conservatives has centered on allegations that the rule undermined the rights of defendants. Freedom of expressiona view that the CFTC appears to share. “The rule directly violates Americans’ First Amendment rights and works to hide the agency’s enforcement operations from the American people,” the agency stated in explaining its position.
Supporters of the rollback claim that the previous policy blurred the line between legal accountability and reputational control, effectively preventing established parties from presenting their own version of events. Moreover, critics of gag clauses have long claimed that they created an imbalance in enforcement settlements, where defendants paid penalties but were also prevented from defending their reputations publicly.
The New Civil Liberties Coalition filed a petition against the CFTC’s gag rule in 2019
Repealing this provision aligns CFTC practice with the federal majority, and enhances enforcement flexibility to conserve administrative resources, achieve certainty, and expedite victim compensation.
Enforcement Division Director David Miller, male“Today’s action harmonizes the Commission’s settlement approach with that taken by other agencies and ensures fairer decisions on implementation matters.”
CFTC Chairman Michael S. “I am pleased that we have rescinded the consistent non-denial policy with regulators across the government,” Selig said.
The CFTC’s policy faced no formal opposition until 2019, when the New Civil Liberties Alliance, a nonprofit legal group, filed a petition to end it. The group claimed that the rule restricts honest expression and fails to serve the public good. She also claimed that the CFTC had no legal basis to issue the gag rule.
Most recently, the group confirmed that the committee shelved its petition for several months, keeping countless targets muzzled during that period. He expressed his hope that the agency would provide relief to the affected individuals.
However, the CFTC announced on Wednesday that it would not enforce non-repudiation clauses already included in existing settlements, and said it would not take any action if the parties violate those terms.
The SEC previously removed the 50-year-old gag rule
In May, the Securities and Exchange Commission (SEC) announced I finish Mask rule. At the time, the agency’s head, Paul Atkins, said that “speech critical of the government is an important part of the American tradition,” adding that the change would allow settlement defendants to publicly criticize the agency.
US Securities and Exchange Commission President Chris Iacovella praised the shift, arguing that previous SEC policy undermined freedom of expression by discouraging defendants from speaking publicly after the settlement.
For more than five decades, the rule has prevented settlement defendants from denying allegations they chose not to admit. The rule was reportedly put in place to discourage any perception that the agency’s claims are unfounded.
However, Ben Shifrin, of the financial advocacy group Better Markets, called on the SEC to implement the rule change without consulting the public. “The SEC should want the public to have no doubt that its sanctions are based on violations of the securities laws,” he said in a statement.
Before the repeal, the agency resisted policy changes. In 2024, Commissioner Hester Peirce stated that the rule was an anomaly among regulators and that public denials had not actually caused problems. In 2017, James Falvo, a consultant and senior policy advisor at the Cause of Action Institute, wrote a paper that addressed concerns about gag rules issued by the SEC and CFTC. At the time, he called for judicial intervention in politics, although no meaningful action was taken.
In its recent rule change announcement, the SEC stated that it does not intend to revisit prior enforcement actions if defendants breach the original non-denial provisions, even after rescission.
