In this book we examine the impact of the First Amendment on speech regulated by the Securities and Exchange Commission (SEC). At first blush it appears rather strange to consider for even a moment the possibility that corporate financial and business disclosure rises to the dignity of speech protected by the First Amendment. Nevertheless, since at least 1976, with the rise of the so-called commercial speech doctrine of the Supreme Court, it is clear that SEC speech receives some level of protection under the Constitution.
In 1976 the Court, for the first time, explicitly held that the advertisement of a prescription drug in the form I will sell you the X prescription drug at the Y price" was speech protected by the free-speech clause of the Constitution.1 The Court, in a series of cases, argued that advertisements conveyed information and belief to the consumer. That dissemination was undoubtedly of real interest to the public, frequently more so than campaign speeches and the like. The Court held that undue governmental interference with the conveyance of information and belief, however economically motivated, is subject to the protection of the First Amendment.2
The Court did not grant the advertisements the full measure of protection afforded to political and artistic speech. It argued that commercial speech is hardier than political or artistic speech, hence less effectively chilled by regulation and censorship. The Court also maintained that the government can more readily distinguish the true from the false in commercial speech than in political speech. Therefore, the government can pre-screen adver-