SEC ‘Gag Orders’ at Risk as Skeptical Court Takes Up Challenge

The Securities and Exchange Commission’s controversial policy of silencing defendants who settle with the agency is under fire once again, as a federal appeals court wary of regulators weighs a constitutional challenge.

The SEC has long allowed parties to settle cases brought by the agency without admitting wrongdoing. But they must also promise not to publicly deny the SEC’s allegations—a policy that’s prompted pushback from SEC targets like Elon Musk and Mark Cuban.

A decision from a federal appeals court that the no-deny condition is unconstitutional would have far-reaching effects for the SEC’s policing of financial markets.

“I don’t know ...