Corporate First Amendment Rights and the SEC

By Nicholas Wolfson | Go to book overview

future. Since it is difficult to know which speech is correct, Benston argues that negative externalities should not chill political speech. After all, he argues, the possibility exists that communists may be in error. Hence limits on speech may harm society.115

He argues that externalities are less in the case of commercial speech. Commercial speech concentrates on reaching consumers of the service or product, who can sue if the product is defective.116 Hence, he believes the case for restricting commercial speech is weaker, in this respect, than in the case of political speech.

The SEC, as we know, imposes, under appropriate statutes, a structure of mandatory disclosure. In chapter 5 I argue that this is a method of imposing government orthodoxy on financial disclosure. In Benston's piece on the First Amendment he asserts that the "question . . . often is one of costs and benefit rather than the prescription of a government orthodoxy.''117 He asserts that fear of an "imposed orthodoxy" is acceptable only "where there is significant limitation on the expression of alternative or supplementary speech''118 Absent that, "required disclosure of political, artistic, and commercial speech can be justified.''119

This is a startling conclusion. It would emasculate most of the restraints that the First Amendment imposes on government. For example, the government could require congressional candidates to "balance out" their speeches. It could require congressional candidates to avoid material omissions. Because the congressional candidate could comment on his required disclosure, or other public figures and newspapers could speak out, the Benston condition of alternative speech is satisfied. This sounds like legitimating proxy-style regulation of political speech. Benston does say that mandatory disclosure could be applied to facts as to which there is little dispute.120 It is not clear that this is a limit on the alternative speech qualification above. Politicians and businesses never agree as to what important information is beyond dispute. The government would have to make that judgment.


NOTES
1.
Posner, Free Speech in an Economic Perspective, 20 Suffolk U.L. Rev.1 (Spring 1986).
2.
Id at 6, quoting Judge Frank Easterbrook in American Booksellers Association, Inc. v. Hudnut, 771 F.2d 323, 328 (7th Cir. 1985), aff'd without opinion, 106 S. Ct. 1172 ( 1986). Judge Easterbrook is another famous scholar of law and economics.
3.
Posner at 6.
4.
Id. at 7.
5.
Director, The Parity of the Economic Market Place, 7J. Law & Econ. 1, 3 ( 1964).
6.
Id.
7.
Id.
8.
Id.

-107-

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Corporate First Amendment Rights and the SEC
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Introduction 1
  • Notes 5
  • 1- Commercial Speech Doctrine 7
  • Notes 37
  • 2- Sec Speech 45
  • Notes 58
  • 3- Scholarly Evaluation of The Commercial Speech Doctrine 63
  • Notes 84
  • 4- Economic Theory, Free Speech, And the Sec 91
  • Notes 107
  • 5- The First Amendment and The Sec 111
  • Notes 159
  • Bibliography 169
  • Index 173
  • About the Author 178
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