Corporate Speech, Securities Regulation, and an Institutional Approach to the First Amendment
Siebecker, Michael R., William and Mary Law Review
Does the First Amendment shield politically tinged corporate speech from the compelled disclosure and reporting requirements embedded in the U.S. securities laws? The question arises in the securities regulation context because of an impending jurisprudential train wreck between the Supreme Court's commercial speech doctrine and its approach to corporate political speech. As corporations begin mixing commercial messages with political commentary, First Amendment jurisprudence simply provides insufficient guidance on the role government should play in regulating that speech. Although First Amendment jurisprudence generally counsels against governmental restrictions on corporate political speech without regard to the truth or falsity of the message, a different branch of that same jurisprudence suggests governmental regulation of commercial speech remains essential to ensure consumers receive accurate information and to maintain market efficiency. Unfortunately, the Supreme Court has never articulated sufficiently clear definitions of "commercial" or "political" speech, or the boundaries between them, to address claims of politically tinged corporate speech. Because the securities laws essentially operate through content-based regulation of compelled speech, which often touches inherently political matters, the securities laws seem especially vulnerable to constitutional attack.
Considering the limitations of current speech jurisprudence, this Article examines whether the "institutional approach" to the First Amendment advocated by Frederick Schauer provides a theoretical basis for maintaining a robust securities regulation regime. Following that approach, a determination of speech rights in any particular institutional setting should depend on an assessment of the societal importance of the institution as well as the relationship between speech rights and the institution's basic role. The Article concludes that an institutional approach to First Amendment jurisprudence not only provides sufficiently strong reasons for insulating the securities regulation regime from the First Amendment's reach, but also lends strong support for embracing a new institutional approach to First Amendment jurisprudence itself.
TABLE OF CONTENTS INTRODUCTION I. THE IMPENDING JURISPRUDENTIAL COLLISION BETWEEN COMMERCIAL SPEECH AND CORPORATE POLITICAL SPEECH A. The Rise of Socially Responsible Investing B. Corporate Responses to Socially Responsible Investing C. Nike, Inc. v. Kasky II. THE LIMITATIONS OF FIRST AMENDMENT THEORY 628 A. Commercial Speech Doctrine B. Corporate Political Speech C. Securities Regulation Adrift III. A NEW INSTITUTIONAL APPROACH 646 A. The Nature of the Problem B. The Tenets of Schauer's Solution IV. SECURITIES REGULATION AND THE INSTITUTIONAL APPROACH A. The Institutional Importance of Securities Regulation B. The Nexus Between Speech Restrictions and Securities Regulation 1. Gun Jumping and Market Conditioning Encouraged 2. Investor Solicitation Rules Thwarted 3. Securities Act Antifraud Provisions Sidestepped 4. Exchange Act Fraud Rules Circumvented 5. Periodic Reporting Rendered Unreliable 6. "Super Safe Harbors" Created 7. Plain English Requirement Ignored 8. Shareholder Proposals Threatened V. NIKE REVISITED CONCLUSION
Does the First Amendment protect from regulation any corporate speech that touches some political chord or matter of public concern? If so, does the First Amendment shield politically tinged corporate speech from the compelled disclosure and reporting requirements embedded in the U.S. securities laws and regulations? For those especially concerned with the integrity of the U.S. capital markets, obtaining an answer to that second question remains a paramount concern. …