Securities and Exchange Commission v. Wall Street Publishing Institute

851 F.2d 365 (1988)

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Securities and Exchange Commission v. Wall Street Publishing Institute

United States Court of Appeals for the District of Columbia Circuit
851 F.2d 365 (1988)

Facts

Wall Street Publishing Institute (WPI) (defendant) published a magazine called Stock Market Magazine (Stock Market). Stock Market sometimes contained articles about individual companies that were written by the companies or their agents (free text) rather than by WPI. Such free text was indistinguishable from content written by WPI itself that appeared in the magazine. WPI did not disclose that it did not author the free text. The Securities and Exchange Commission (SEC) (plaintiff) sued WPI, alleging that WPI violated § 17(b) of the Securities Act of 1933, which prohibits a publisher from accepting consideration from an issuer for describing a security unless the publisher discloses the consideration. The SEC sought an injunction ordering WPI to cease violating § 17(b), including by disclosing its receipt of free text. WPI argued that because Stock Market was a bona fide publication, the First Amendment immunized WPI from any content-based regulation under § 17(b). The SEC responded that WPI’s articles were commercial speech that enjoyed only limited First Amendment protection and thus the requested injunction would be constitutional. The district court granted summary judgment to WPI, ruling that the First Amendment precluded applying § 17(b) to bona fide publishers. The SEC appealed.

Rule of Law

Issue

Holding and Reasoning (Silberman, J.)

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