Trump’s SEC eliminates 50-year-old ‘gag rule’ for enforcement settlements
President Donald Trump’s administration has ended a decades old policy that barred companies that settle lawsuits with the Securities and Exchange Commission (SEC) from publicly disputing any allegations of wrongdoing made by the agency.
Before this change, announced Monday, a commonly called “gag rule” was typically a condition of settlements with the SEC, unless a company challenged regulators and won outright.
Officially, the SEC rescinded Rule 202.5(e), which has been in place for over 50 years, surviving multiple Republican and Democrat administrations alike.
However, recently the rule has drawn the ire of business magnates, namely Mark Cuban, a TV personality and investor who co-founded Cost Plus Drugs—and Elon Musk, one of the world’s wealthiest men and former Trump administration official, known for creating the agency “DOGE” that cut the federal workforce in early 2025.
The gag order has also been criticized by capitalist right-libertarian think tank the CATO Institute, which released a blog in April, backing growing pressure from individuals and groups petitioning the SEC to remove the restriction on free speech grounds.
A formal lawsuit was filed in February 2025, challenging the constitutionality of the policy. The CATO Institute filed an amicus brief in support of the plaintiffs, led by investor Thomas Joseph Powell.
After the SEC declined to make any changes, the case was reviewed by the U.S. Court of Appeals for the Ninth Circuit, which in August 2025 upheld the gag rule.
Powell had intended to appeal. However, the lawsuit may now be on hold, given that the SEC has opted to meet the demands of plaintiffs without the Supreme Court getting involved.
"For more than 50 years, the Commission has conditioned settlement on a defendant's promise not to publicly deny the Commission's allegations. I am pleased that we are rescinding the no-deny policy today," SEC Chairman Paul S. Atkins said in a statement. "Speech critical of the government is an important part of the American tradition.”
“This rescission ends the policy prohibiting such criticism by settling defendants,” he added.
All industries impacted—including healthcare
The job of the SEC is to monitor markets for signs of insider trading and to ensure publicly traded entities are complying with federal reporting requirements and investor transparency laws.
On the New York Stock Exchange alone, healthcare companies make up roughly 10-15% of stocks traded on the open market. Additionally, many publicly traded investment firms have stakes in healthcare companies, from hospitals to tech companies.
With Rule 202.5(e) rescinded, those companies are free to openly and publicly refute the claims made by the SEC, even if they agree to a settlement and remedies related to misconduct.
It remains to be seen if the change is permanent under a future administration.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.