The Courts
Cato: Cato Sues SEC Over Gag Orders
By Clark Neily
Earlier today, Cato sued the Securities and Exchange Commission in federal court challenging the SEC’s policy of imposing perpetual gag orders on settling defendants in civil enforcement actions. The clear point of that policy is to prevent people with the best understanding of how the SEC uses its vast enforcement powers from sharing that knowledge with others. But silencing potential critics is not an appropriate use of government power and, as explained in Cato’s complaint, it plainly violates the First Amendment’s protections of free speech and a free press.
The case began when a well-known law professor introduced us to a former businessman who wanted to publish a memoir he had written about his experience being sued by the SEC and prosecuted by DOJ in connection with a business he created and ran for several years before the 2008 financial crisis. The memoir explains in compelling detail how both agencies fundamentally misconceived the author’s business model-absurdly accusing him of operating a Ponzi scheme and sticking with that theory even after it fell to pieces as the investigation unfolded-and ultimately coerced him into settling the SEC’s meritless civil suit and pleading guilty in DOJ’s baseless criminal prosecution after being threatened with life in prison if he refused.
The author now wants to tell his side of the story, and Cato wants to publish it as a book-but both are prevented from doing so by a provision in the SEC settlement agreement that forbids the author from “mak[ing] any public statement denying, directly or indirectly, any allegation in the [SEC’s] complaint or creating the impression that the complaint is without factual basis.”
Courthouse News Service: Federal Judge Stops Enforcement of Maryland Election Law
By Edward Ericson Jr
“I conclude that Plaintiffs’ First Amendment claim is likely to succeed on the merits,” U.S. District Judge Paul W. Grimm wrote in a 50-page opinion. “This conclusion stems from my determination that the Act’s impositions on online publishers are subject to strict scrutiny and that they most likely would not withstand this form of judicial review.”
“We are very pleased with the court’s thoughtful and well-reasoned decision,” said Seth Berlin of Ballard Spahr, who represents the Washington Post, Baltimore Sun and other publications that challenged the law in August. “While the judge recognized that combating foreign influence in our elections is important, he correctly ruled that this statute was both an ineffective and unconstitutional way of doing so.”
The Maryland Legislature passed the Online Electioneering Transparency and Accountability Act in 2017; it became law without Gov. Larry Hogan’s signature.
The law requires platforms with more than 100,000 monthly visitors to publish the names and contact information for any purchaser of a “qualifying paid digital communication,” along with the price paid.
It also requires that the news organizations maintain a publicly available database identifying the candidate or ballot issue to which the ad relates, the dates and times when the ad was first and last published, a copy of the ad, an “approximate description of the audience that received, or was targeted to receive, the communication; and … [t]he total number of impressions generated by the communication.”
Congress
The Oklahoman: On campaign finance, leave well enough alone
By Editorial Board
There is an obvious conflict between free-speech rights and politicians’ desire to micromanage their opponents’ campaign spending and donations, and past “reforms” have made campaigns more expensive with less accountability. There’s no reason to think a new federal package will generate better results.
House Democrats recently filed their “For the People Act,” a bill that includes provisions regarding numerous issues, including voter registration and campaign finance…
From a 20,000-foot view, it’s evident complaints about the undue influence of money in politics are overblown and that past “reforms” have made things worse. When the McCain-Feingold Act of 2002 limited private contributions to political parties, it shifted donations and greater influence to ideological interest groups and wealthy citizens, which most officials now concede resulted in more extreme rhetoric, polarization and gridlock.
Now House Democrats are, in effect, vowing to reform the problems created by similar reforms, which in turn will lead to efforts to fix the problems created by the reform to the reform. Here’s a better approach: Leave well enough alone. While we generally favor transparency in reporting of candidate contributions, efforts to stymie citizens’ free-speech activities are not only unnecessary, but too often counterproductive.
Capital Gazette: John Sarbanes: HR 1 would help restore the promise of our democracy
By Rep. John Sarbanes
H.R. 1 breaks the influence of big money and special interests in Washington by establishing a revolutionary matching system for citizen-owned elections. By matching small donations and encouraging Congressional candidates to accept voluntary restrictions on PAC money and large contributions, this new system empowers the American people to take back their democracy from wealthy and well-connected special interests.
H.R. 1 will also bring more transparency to political spending by shining a light on secret money in our politics and requiring large digital platforms to maintain databases of political ads. It prevents foreign money from entering our political system and revamps the Federal Election Commission to ensure there’s an effective cop on the beat to enforce our nation’s campaign finance laws…
These are not reforms for reform’s sake. They are carefully designed to unrig the system so everyday citizens can set the agenda in Washington and make progress on the issues that matter most, whether it’s lowering prescription drugs prices, building a fair economy, reducing gun violence or combating climate change and rising sea levels that threaten coastal communities, including right here in Annapolis…
Democratic candidates across the country ran on these reforms during the last election. We promised to clean up the culture of corruption in Washington and return power to the American people. Now, we are ready to keep that promise by passing H.R. 1 and returning to a government of, by and for the people.
Bloomberg Law: House Dems Seek SEC Rule on Political Giving Disclosure
By Lydia Beyoud and Andrea Vittorio
The Securities and Exchange Commission could require publicly traded companies to disclose their political spending under one of the first bills the new House Democratic majority introduced Jan. 4.
Language lifting a ban that’s prevented the SEC from writing a political donation disclosure rule is part of a broader Democratic bill (H.R. 1) that would overhaul campaign finance disclosures, elections security, and ethics rules. Rep. John Sarbanes (D-Md.), who heads the House Democrats’ Democracy Reform Task Force, spearheaded the effort.
House Democrats want to vote on the package by the end of January or early February, Sarbanes told reporters after a Jan. 4 press conference. It would face an uphill battle in the Republican-controlled Senate, where Sens. Tom Udall (D-N.M.) and Jeff Merkley (D-Ore.) plan to introduce companion legislation…
At least one sitting member of the SEC has been a proponent of greater disclosure. Commissioner Robert Jackson signed onto a 2011 petition asking the SEC to mandate political expenditures reporting when he was a professor at Columbia Law School and led protests outside the agency’s headquarters in 2014.
But Senate Majority Leader Mitch McConnell (R-Ky.) has repeatedly added provisions to budget and tax bills preventing the commission from working on any sort of political disclosures rulemaking. His stance isn’t likely to change…
Even if the legislation doesn’t pass, it could still set the stage for keeping a provision blocking political spending disclosure out of the next funding bill for the SEC, according to Public Citizen’s Gilbert.
Reason: Are Boycotts Protected by the First Amendment?
By Jacob Sullum
Half of the states have responded to the BDS movement by boycotting the boycotters, refusing to hire contractors who won’t promise not to shun companies that do business in Israel. The Combating BDS Act, a bill introduced in the U.S. Senate last week, aims to protect such laws by eliminating the threat of federal pre-emption.
The American Civil Liberties Union has successfully challenged anti-BDS laws on behalf of a curriculum coach in Kansas and an attorney in Arizona, and last month the Council on American-Islamic Relations filed a similar lawsuit on behalf of a speech pathologist in Texas. The ACLU and CAIR argue that rejecting contractors who refuse to sign an anti-boycott pledge unconstitutionally punishes them for exercising their First Amendment rights.
All three lawsuits rely on a 1982 case in which the Supreme Court said an NAACP boycott of white merchants in Claiborne County, Mississippi, aimed at securing “compliance by both civic and business leaders with a lengthy list of demands for equality and racial justice,” was protected by the First Amendment. Last year two federal judges agreed that the BDS movement is constitutionally analogous to the NAACP boycott and issued preliminary injunctions against enforcement of anti-BDS laws in Kansas and Arizona…
Opponents of the BDS movement who strive to legally distinguish it from the NAACP’s boycott in Mississippi seem to be driven by political sympathy more than constitutional principle.
Online Speech Platforms
Washington Post: Who shared fake news during the 2016 election campaign? You’ll be surprised.
By Andy Guess, Jonathan Nagler and Joshua Tucker
This week, the New York Times broke the news that Democratic activists posted misleading Facebook pages and Twitter feeds during the 2017 U.S. Senate race in Alabama. That’s just the latest iteration in the ongoing saga of online disinformation and “fake news” since the 2016 U.S. presidential election. Researchers have learned a lot about fake news – who produced the content, who encountered it, who may have believed it and how to counteract it.
Now we know a bit more about who actually shared it. In research we are publishing today in the journal Science Advances, we find that in general, the proportion of people on Facebook who shared links to fake news websites was relatively low. That said, however, older Americans – especially those over 65 – were much more likely to share fake news than younger ones, and conservatives and Republicans were more likely to share fake news than were liberals and Democrats.
The Media
New York Times: Must Writers Be Moral? Their Contracts May Require It
By Judith Shulevitz
This past year, regular contributors to Condé Nast magazines started spotting a new paragraph in their yearly contracts. It’s a doozy. If, in the company’s “sole judgment,” the clause states, the writer “becomes the subject of public disrepute, contempt, complaints or scandals,” Condé Nast can terminate the agreement. In other words, a writer need not have done anything wrong; she need only become scandalous. In the age of the Twitter mob, that could mean simply writing or saying something that offends some group of strident tweeters…
Jeannie Suk Gersen, a Harvard Law School professor who writes regularly for The New Yorker, a Condé Nast magazine, read the small print, too, and thought: “No way. I’m not signing that.” Ms. Gersen, an expert in the laws regulating sexuality, often takes stands that may offend the magazine’s liberal readers…
[W]hen the trigger for termination could be a Twitter storm or a letter-writing campaign, she said, “I think it would have a very significant chilling effect.” …
In 1947, the concern was Communism, and morality clauses gave studios a way to blacklist the Hollywood 10, a group of directors and screenwriters who denounced the House Un-American Activities Committee as illegitimate and refused to say whether they’d ever been Communists…
Not long ago, publishers were hailed as countercultural heroes for backing works that offended public sensibilities. Barney Rosset, the publisher of Grove Press, introduced Americans to Samuel Beckett, Jack Kerouac, Malcolm X, Marguerite Duras and Kathy Acker, among scores of other writers considered avant-garde at the time…
Times change; norms change with them. Morality clauses hand the power to censor to publishers, not the government, so they don’t violate the constitutional right to free speech. But that power is still dangerous.
Fundraising
Washington Post: How a little-known Democratic firm cashed in on the wave of midterm money
By Michelle Ye Hee Lee and Anu Narayanswamy
The solicitations piled into voters’ email accounts – sometimes multiple times a day. And they carried alarming messages, often in blaring capital letters…
The catastrophic language yielded a fundraising bonanza for clients of Mothership Strategies, a little-known and relatively new digital consulting firm that raked in tens of millions of dollars from a tide of small donations that flowed to Democrats during the 2018 midterm elections.
The firm’s ascendancy as one of the highest-paid vendors of the election since its launch four years ago speaks to how lucrative the explosion of small-dollar donations has been for a group of savvy political consultants who saw the wave of cash coming – and built a business model to capitalize off it…
The company’s profits are built on exaggerating fears, some fellow Democrats say, and could erode trust among small donors needed to help 2020 presidential contenders compete with Trump’s loyal base of contributors – and beyond…
About a quarter of the payments that flowed to Mothership during the midterm elections came not from campaigns, but from political entities run by operatives with whom the Mothership founders have personal and professional ties, according to public records.
The three groups – End Citizens United, Progressive Turnout Project and National Democratic Training Committee – together paid more than $9 million to Mothership, records show. Officials with all three groups previously worked with Starnes on past campaigns for Rep. Bradley Schneider (D-Ill.).
The States
Star Tribune: Here’s a chance to add more more transparency on campaign ads
By Editorial Board
Disclosure requirements already exist for campaign ads that directly urge voters to specifically back a candidate – so-called “express advocacy” ads that use campaign phrases like “vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat” or “reject.”
But in Minnesota, the same rules don’t apply to ads that clearly favor a candidate but do so without the types of words or phrases deployed in express-advocacy ads. These ubiquitous messages might urge voters to call a senator’s or representative’s office and urge her or him to back (or back off) a policy proposal.
Especially when run close to an election, the intent of these ads is quite clear. But who is bankrolling them is not.
That should change. The Legislature should be open to considering new rules if Minnesota’s Campaign Finance and Public Disclosure Board advances a proposal to ask lawmakers to require such disclosure for the “functional equivalent” of express advocacy.
Or, as the board states in one of three versions of draft language, “that a communication, when taken as a whole and with limited reference to external events, including the proximity to the election, is not susceptible to any other interpretation by a reasonable person other than that as advocating the election or defeat of one or more clearly identifiable candidates.” …
When the state’s Campaign Finance and Public Disclosure Board revisits the issue at a Feb. 6 meeting, it should move forward with a request for legislators to take up the matter.
Alexandria Gazette Packet: Northam Touts Bills on Voting Rights and Campaign Financing
By Owen FitzGerald, Capital News Service
The Democrats also want legislation that limits campaign donations and restricts how candidates can spend political contributions.
Sen. Chap Petersen, D-Fairfax, is sponsoring legislation (SB 1146) that would limit individual donations to $10,000 per candidate during a given election cycle. Virginia is one of only 11 remaining states that have no limits on campaign contributions.
“There’s too much big money in politics,” Petersen said. “We need some reasonable limits on what people can contribute in order to keep the process honest.”
A second proposal to be sponsored by Del. Elizabeth Guzman would ban corporate and business campaign donations. It also would ban corporations or businesses from making direct contributions to their own political action committees.
“Our Commonwealth has an opportunity to reform campaign finance laws by banning direct corporate and business donations,” Guzman stated. “Virginians want legislators who represent their interests, and this reform will foster more trust in the legislative process.”
Del. Marcus Simon, D-Fairfax, is the sponsor of a bill (HB 1699) to ban candidates from using campaign money for personal expenses.
