Government agency to answer publishers’ First Amendment lawsuit

Thursday, May 7, 1998

The Commodity Futures Trading Commission must file an answer today to a lawsuit brought by a group of newsletter publishers challenging a federal law that requires anyone who advises about, or even discusses, products traded on an exchange to register as a commodity trading adviser.

The agency interprets the law to apply to virtually anyone who has a Web site that discusses commodities.

In 1996, the CFTC said it would start requiring those who publish information about commodities on the Internet to register with the agency, even if the individuals do not manage funds or offer personalized investment advice. Registering involves fingerprinting, paying fees and filing reports with the CFTC.

A group of 10 individuals who publish or receive information about commodities contend in the federal lawsuit filed last July that “the registration requirements, including the investigation, fee system and CFTC oversight powers, unconstitutionally condition the exercise of First Amendment freedoms on the surrender of privacy rights.”

The group asserts that the agency rules are so broad they could be applied to anyone on the Internet who even reprints a publication that discusses commodities.

After the lawsuit was filed, the agency sought to have it dismissed on procedural grounds. However, a federal district court denied the government's motion in April to dismiss and ordered the agency to file an answer by today.

The Institute of Justice, which describes itself as “the nation's premiere libertarian public interest law firm,” says the agency's attempts to impose regulatory control over anyone on the Internet who publishes information about commodities “poses a much larger threat to free speech than even the Communications Decency Act.”

Certain provisions of the Communications Decency Act criminalized the transmission of “indecent” and “patently offensive” speech over the Internet. These provisions were ruled unconstitutional by the U.S. Supreme Court in June 1997.

An attorney with the Institute of Justice, which is helping the publishers in their efforts, said the judge's ruling allowing the suit to proceed represented a “big step toward vindication” of publishers' free-speech rights.

Scott Bollock said: “The CFTC rules are a classic prior restraint on free speech. We are hopeful now that the lawsuit will be proceeding to the merits of the case that we have a very good chance of having this unconstitutional law struck down by the court.”

A call placed to the agency was not returned.