What can and can't be done to regulate speech

By DAVID MOON, Moon Capital Management, LLC
October 27, 2013

My kids’ social studies teacher has done an outstanding job of introducing my 13-year-olds to the first amendment to the US Constitution. They are quick to whip out their “free speech” card any time I place a restriction on their language.

They do not understand, however, that their parents are not Congress. The Constitution does not preclude me from prohibiting bathroom humor at the dinner table or a mean-spirited discussion about the size of someone’s ears.

The term “freedom of speech” is used so haphazardly that it is easily and unintentionally misused. Human beings do not have an unimpeded, absolute right to say whatever they want wherever they want.

Not only can I not yell “fire” in a crowded and otherwise safe theater, the owner of the theater has the right to outlaw whispering in the auditorium if he chooses.

If I write something that offends the editor or publisher of this newspaper, he has no obligation to print it.

Most of us agree, however, that the government cannot control what I write for Scripps.

But what if I wrote a column recommending that people sell their stocks and buy pet rocks or something similarly silly?

That would be stupid of me to write, stupid for this newspaper to publish and stupid advice for anyone to follow.

But does the government have a right to prohibit me from saying it? The Securities and Exchange Commission (SEC) regulates investment advisers—and I work for an investment adviser. But what if Sam Venable—who isn’t subject to SEC regulation—wrote a column offering presumably serious investment advice?

How does one differentiate speech (which the government cannot limit) and conduct (which it must often limit)?

In a series of 1980s cases culminating with Lowe v. SEC, federal courts sidestepped the constitutional question of speech versus conduct by holding that if an investment newsletter publisher prints advice that is not personalized, the publisher enjoys a statutory exemption from SEC registration—and thus its jurisdiction.

More recently, however, the SEC appears to be testing the Lowe decision, initiating actions against newsletter publishers and radio personalities—none of which are registered with the SEC.

One such publisher, Stansberry & Associates, has subscribers in more than 100 countries.

Whether Stansberry is actually providing investment advice is subject to legal debate, but it seems to me that it is difficult to provide advice to someone you’ve never met.

This is a similar argument the US Supreme Court addressed when it decided that disseminating money to a political campaign is akin to disseminating speech – not conduct.

The issue extends well beyond investments and politics.

New Jersey governor Chris Christie recently signed a law that prohibits any licensed therapist, psychologist, social worker or counselor from attempting to change the sexual orientation of anyone under age 18.

In most cases, all a counselor does is talk. And listen. Is that speech or conduct?

And should government limit the speech of someone based on society’s general acceptance, repudiation or benefit from the speech?

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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