In a three-day federal trial in Washington D.C., Internet publishers of commodities information and the Commodities Futures Trading Commission battled over the constitutionality of the agency's attempts to regulate speech about commodities over the Net.
Ten individuals challenged the constitutionality of CFTC regulations that require anyone publishing information about commodities or futures trading for compensation to register as a "commodity trading adviser."
The CFTC interprets the law to apply to virtually anyone who runs a Web site that discusses commodities.
The plaintiffs include publishers of books, newsletters, software programs and Web sites that discuss commodities and futures trading, as well as subscribers to these media. None of the plaintiffs manages funds or offers personalized investment advice.
Nevertheless, the CFTC requires the plaintiffs to register as advisers — a process that includes fingerprinting, background checks and filing reports with the commission. Individuals who fail to register are subject to severe civil and criminal penalties.
The plaintiffs in Taucher v. Born contend that the CFTC's "application of the registration requirements to plaintiffs violates [the plaintiffs'] First Amendment rights to publish freely without prior restraint or compelled registration." The lawsuit also alleges that "the CFTC's current application of … [federal law] … interferes with plaintiff subscribers' First Amendment right to receive information from willing publishers."
The CFTC asserts that the interactive nature of the Internet and of software programs allows for greater government regulation to protect the public from misinformation.
In the trial held May 3-5, the publishers, represented by the Institute for Justice, argued that the regulations chilled their free-speech rights. Several of the publishers testified in a courtroom wired for live Internet access.
The Institute for Justice argued that there is a sharp distinction between constitutionally permissible professional licensing and unconstitutional licensing of speech.
Scott Bullock, the Institute for Justice senior attorney who argued the case, says that
if the regulations are upheld, a "dangerous precedent" will be set for government regulation of Internet speech. "There is the possibility that a favorable decision for the CFTC would encourage other government agencies to license speech," he said.
"These regulations basically say the government can require someone to be fingerprinted by the government before they can publish a book or newsletter about commodities," he said. "These regulations also conflict with the central premise of the Internet, which is that anyone can be a publisher."
The CFTC refused to comment on the case before a ruling has been issued.
Bullock said the judge indicated at the close of the trial that he would issue a ruling in a couple of weeks.