## Facts

- Wall Street Publishing Institute, Inc. (WSPI) published *Stock Market Magazine*, a periodical directed at small investors, about ten times per year with circulation around 15,000.
- The magazine contained general editorial content (financial news and commentary) and longer feature articles focused on particular publicly traded companies.
- The SEC alleged that certain feature articles were published in exchange for consideration from issuers or their agents, including issuer-supplied promotional copy (“free text”) and other benefits.
- The SEC alleged WSPI did not disclose that consideration had been received, as required by § 17(b) of the Securities Act of 1933 (the “anti-touting” provision), which requires disclosure of both the fact and amount of consideration for publications describing securities.
- The SEC sought an injunction requiring WSPI to comply with § 17(b) by disclosing such consideration in feature articles that promoted specific securities.
- WSPI argued that it was a bona fide news publication and that compelled disclosure under § 17(b) would be unconstitutional under the First Amendment as a content-based restriction and an unlawful prior restraint.

## Issues

1. Whether applying Securities Act § 17(b) to a periodical’s issuer-compensated feature articles violates the First Amendment.
2. Whether an injunction compelling disclosure of issuer consideration for securities descriptions constitutes an unconstitutional prior restraint.
3. Whether the challenged feature articles may be treated as commercial speech subject to mandatory, factual disclosure requirements.

## Decision

- The D.C. Circuit reversed the district court’s summary judgment for WSPI and its denial of injunctive relief.
- The court held that § 17(b) is constitutional as applied to WSPI’s alleged practice of publishing issuer-compensated articles without disclosure.
- The court rejected the district court’s conclusion that compelled disclosure via injunction was categorically barred as a prior restraint.
- The case was remanded for further proceedings to determine whether injunctive relief should issue and, if so, to craft appropriate terms under equitable standards.

## Legal Principles

- Section 17(b) may require publishers to disclose both the receipt and amount of issuer (or agent) consideration when they describe securities for compensation; the statute does not forbid publication, but conditions nondisclosure.
- The presence of legitimate editorial content does not exempt a publication from generally applicable securities disclosure rules when particular content functions as paid promotion.
- Paid promotional descriptions of securities may be treated as commercial speech, which receives reduced First Amendment protection and may be subject to compelled disclosure aimed at preventing deception.
- An order compelling factual disclosure, rather than prohibiting publication, is not automatically a prior restraint in the strict sense; the constitutional analysis depends on the nature of the speech and the regulatory objective.
- Courts may allow narrowly tailored disclosure requirements reasonably related to the government’s substantial interest in preventing misleading practices in the securities markets.

## Conclusion

The D.C. Circuit held that the SEC could apply § 17(b) to require disclosure when a financial magazine publishes issuer-compensated articles touting specific securities, and it rejected a categorical First Amendment bar based on “bona fide” press status or prior-restraint doctrine, remanding for determination of appropriate injunctive relief.


Securities & Exchange Commission v. Wall St. Publ’g Inst., Inc., 851 F.2d 365 (D.C. Cir. 1988)