Commodifying Speech

What's the difference between analysts who comment on the stock market for newspapers or the nightly news, durable goods for Consumer Reports, and commodity markets for newsletters and Web sites? Individuals who comment on commodity markets in print must register with the federal government or face felony charges punishable by five-year prison terms and $500,000 fines.

Since 1993 the Commodity Futures Trading Commission has required anyone who publishes information on the commodity markets to register as a "commodity trading adviser." Each adviser must pay an annual fee of $100, submit to fingerprinting, and allow on-demand audits.

In late July the Institute for Justice, a Washington, D.C.-based public interest law firm, filed a lawsuit on behalf of newsletter and on-line publishers, charging the CFTC with unconstitutionally abridging their speech. "In America, you don't need permission from the government before offering your opinions," says I.J.'s lead attorney, Scott Bullock. "This case will decide whether the government can control the flow of financial investment information."

The plaintiffs have the Constitution and Supreme Court precedent on their side. When the Securities and Exchange Commission attempted to regulate stock market writers in the 1980s, the Supreme Court rebuffed its regulatory overreach, ruling in Lowe v. Securities and Exchange Commission (1985) that individuals who merely publish stories on the stock market need not seek government approval.

While the CFTC hadn't replied to the lawsuit at press time, it has maintained that Lowe doesn't apply to commodity trading.

Although pursued in the name of protecting investors, the registration rule hurts them by constraining the free flow of information. The pernicious publications the CFTC seeks to keep in check include plaintiff Bo Thunman's Club 3000, a forum for a group of traders who critique commodity advisers, and plaintiff Roger Rines's Commodity Traders Consumer Reports, which ranks advisers for accuracy.

More information is available at free.ij.org.