Case: 24-1754 Document: 00118222062 Page: 1 Date Filed: 12/04/2024 Entry ID: 6685567

United States Court of Appeals

for the

First Circuit
Case No. 24-1754

US SECURITIES & EXCHANGE COMMISSION,

Plaintiff-Appellee,
– v. –
GREGORY LEMELSON, a/k/a Father Emmanuel Lemelson;
LEMELSON CAPITAL MANAGEMENT, LLC,
Defendants-Appellants,
THE AMVONA FUND, LP,
Defendant.
_____________________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS BOSTON DIVISION, NO. 1:18-CV-11926-PBS

BRIEF OF AMICI CURIAE ADVANCING AMERICAN FREEDOM, INC.;

AMERICAN ENCORE; AMERICANS FOR LIMITED GOVERNMENT;
CATHOLICS COUNT; EAGLE FORUM; EAGLE FORUM OF GEORGIA;
FAMILY INSTITUTE OF CONNECTICUT ACTION; CHARLIE GEROW;
INTERNATIONAL CONFERENCE OF EVANGELICAL CHAPLAIN
ENDORSERS;
(List of Amici Continued on Inside Cover)

J. MARC WHEAT
Counsel of Record
ADVANCING AMERICAN FREEDOM, INC.
801 Pennsylvania Avenue, N.W.
Washington, DC 20004
(202) 780-4848
[email protected]
Counsel for Amici Curiae
December 4, 2024

(800) 4-APPEAL • (130621)

Case: 24-1754 Document: 00118222062 Page: 2 Date Filed: 12/04/2024 Entry ID: 6685567

JCCWATCH.ORG; TIM JONES, FORMER SPEAKER, MISSOURI

HOUSE, CHAIRMAN, MISSOURI CENTER-RIGHT COALITION; MEN
AND WOMEN FOR A REPRESENTATIVE DEMOCRACY IN AMERICA,
INC.; NEW JERSEY FAMILY POLICY CENTER; MELISSA ORTIZ,
PRINCIPAL & FOUNDER, CAPABILITY CONSULTING; PROJECT 21
BLACK LEADERSHIP NETWORK; PRO-LIFE WISCONSIN; PAMELA S.
ROBERTS, IMMEDIATE PAST PRESIDENT- KENTUCKY FEDERATION
OF REPUBLICAN WOMEN; RICK SANTORUM; SETTING THINGS
RIGHT; 60 PLUS ASSOCIATION; STAND FOR GEORGIA VALUES
ACTION; TEA PARTY EXPRESS; TEA PARTY PATRIOTS ACTION, INC.;
THE AMERICAN ASSOCIATION OF SENIOR CITIZENS; WOMEN FOR
DEMOCRACY IN AMERICA, INC.; YANKEE INSTITUTE; YOUNG
CONSERVATIVES OF TEXAS; YOUNG AMERICA’S FOUNDATION
SUPPORTING APPELLANTS AND REVERSAL
Case: 24-1754 Document: 00118222062 Page: 3 Date Filed: 12/04/2024 Entry ID: 6685567

RULE 26.1 CORPORATE DISCLOSURE STATEMENT

The amici curiae Advancing American Freedom, Inc.; American Encore;

Americans for Limited Government; Catholics Count; Eagle Forum; Eagle Forum

of Georgia; Family Institute of Connecticut Action; Charlie Gerow; International

Conference of Evangelical Chaplain Endorsers; JCCWatch.org; Tim Jones, Former

Speaker, Missouri House, Chairman, Missouri Center-Right Coalition; Men and

Women for a Representative Democracy in America, Inc.; New Jersey Family

Policy Center; Melissa Ortiz, Principal & Founder, Capability Consulting; Project

21 Black Leadership Network; Pro-Life Wisconsin; Pamela S. Roberts, Immediate

Past President- Kentucky Federation of Republican Women; Rick Santorum; Setting

Things Right; 60 Plus Association; Stand for Georgia Values Action; Tea Party

Express; Tea Party Patriots Action, Inc.; The American Association of Senior

Citizens; Women for Democracy in America, Inc.; Yankee Institute; Young

Conservatives of Texas; and Young America’s Foundation are nonprofit

corporations. They do not issue stock and are neither owned by nor are the owners

of any other corporate entity, in part or in whole. They have no parent companies,

subsidiaries, affiliates, or members that have issued shares or debt securities to the

public. The corporations are operated by volunteer boards of directors.

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TABLE OF CONTENTS
Page

RULE 26.1 CORPORATE DISCLOSURE STATEMENT .......................................i

TABLE OF AUTHORITIES ................................................................................... iii
STATEMENT OF INTEREST OF AMICI CURIAE ................................................ 1
INTRODUCTION AND SUMMARY OF THE ARGUMENT ............................... 2
ARGUMENT ............................................................................................................. 5
I. The Constitution Separates the Powers of Government to
Ensure the Rule of Law and Thereby Protect the Rights
of the People .......................................................................................... 5
II. The SEC’s Refusal to Comply with the Equal Access to
Justice Act is Consistent with its Recent Pattern of Seeking
to Unconstitutionally Expand its Power ................................................ 9
III. The SEC’s Refusal to Cover Father Lemelson’s Attorney’s
Fees Will Chill Future First Amendment Activity .............................. 13
CONCLUSION ........................................................................................................ 15

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TABLE OF AUTHORITIES
Page(s)
Cases:
Ams. for Prosperity Found. v. Bonta,
141 S. Ct. 2373 (2021) .........................................................................................13
Bantam Books, Inc. v. Sullivan,
372 U.S. 58 (1963) ...............................................................................................14
INS v. Chadha,
462 U.S. 919 (1983) ...............................................................................................7
Laird v. Tatum,
408 U.S. 1 (1972) .................................................................................................14
McCulloch v. Maryland,
17 U.S. 316 (1819) ...............................................................................................10
NAACP v. Button,
371 U.S. 415 (1963) .............................................................................................13
Obergefell v. Hodges,
576 U.S. 644 (2015) ...........................................................................................6, 7
Saltzberg v. TM Sterling/Austin Assocs., Ltd.,
45 F.3d 399 (11th Cir. 1995) .......................................................................... 14-15
SEC v. Jarkesy,
144 S. Ct. 2117 (2024) .................................................................................... 4, 12
SEC v. Lemelson,
532 F. Supp. 3d 30 (D. Mass. 2021).....................................................................14
SEC v. Lemelson,
No. 18-11926, 2024 WL 3507495 (D. Mass. July 23, 2024) .................................3
United States v. Fisher,
6 U.S. 358 .............................................................................................................13
Yick Wo v. Hopkins,
118 U.S. 356 (1886) ...............................................................................................8

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Constitutional and Statutory Provisions:

U.S. Const., amend. I ....................................................................................... passim
U.S. Const., amend. IV ............................................................................................11
U.S. Const., amend. IX ..............................................................................................7

Regulations:
17 C.F.R. § 242.613(c)(2)-(8) ..................................................................................11
17 C.F.R. § 242.613(e)(2) ........................................................................................11

Other Authorities:
1 W. Blackstone, Commentaries on the Laws of England 119 (1765) ..................... 6
Brief of Amici Curiae Advancing American Freedom et al., Diamond
Alternative Energy v. Environmental Protection Agency, No. 24-7,
available at https://advancingamericanfreedom.com/diamond-alternative-
energy-v-environmental-protection-agency/ ........................................................ 11
Brief of Amici Curiae Advancing American Freedom et al.,
SEC v. Jarkesy, No. 22-859 (Jun 27, 2024) available at
https://advancingstg.wpenginepowered.com/wp-content/uploads/
2023/10/2023-10-18-22-859-Jarkesy-AAF-Final.pdf .......................................... 12
Brief of Amici Curiae Advancing American Freedom, et al.,
Davidson v. Gensler, No. 6:24-cv-00197 (W.D. Tex.) available at
https://advancingamericanfreedom.com/davidson-v-gensler/ ............................... 9
Hadley Arkes, A Natural Law Manifesto or an Appeal from the Old
Jurisprudence to the New, 87 Notre Dame L. Rev. 1245 (2013)........................... 7
Edwin J. Feulner, Jr., Conservatives Stalk the House: The Story of the
Republican Study Committee, 212 (Green Hill Publishers, Inc. 1983) .................. 1
Edward H. Fleischman, Commissioner, SEC, Address to the Women in
Housing and Finance, The Fourth Branch at Work, (November 29, 1990)
https://www.sec.gov/news/speech/1990/112990fleischman.pdf ........................... 4
Neil Gorsuch & Janie Nitze, Over Ruled: The Human Toll of Too Much Law
(2024).................................................................................................................... 10
Thomas Hobbes, Leviathan ....................................................................................... 7

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John Locke, Second Treatise on Government, § 6 (C.B. Macpherson ed. 1980)...... 6

Montesquieu, Spirit of the Laws, § 11.4 (Thomas Nugent trans. 1752) (1748) ..7, 10
Hester M. Pierce, Green Regs and Spam: Statement on the Enhancement and
Standardization of Climate-Related Disclosures for Investors (Mar. 6,
2024) available at https://www.sec.gov/newsroom/speeches-
statements/peirce-statement-mandatory-climate-risk-disclosures-030624 .......... 11
Jeffery Rosen, The Pursuit of Happiness: How Classical Writers on
Virtue Inspired the Lives of the Founders and Defined America
(Simon & Schuster 2024) ....................................................................................... 6
The Federalist No. 47 (James Madison) (George W. Carey and
James McClellan, eds., The Liberty Fund 2001) ................................................. 10
The Federalist No. 48 (J. Madison) ......................................................................... 10
The Federalist No. 51 (James Madison) (Jacob E. Cooke ed., 1961) ....................... 8
The Godfather (Paramount Pictures 1972) ................................................................ 4

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STATEMENT OF INTEREST OF AMICI CURIAE

Advancing American Freedom (AAF) is a nonprofit organization that promotes

and defends policies that elevate traditional American values, including equal

treatment before the law.1 AAF “will continue to serve as a beacon for conservative

ideas, a reminder to all branches of government of their responsibilities to the

nation,”2 and believes that America’s system of constitutional government, unique

in the world, must be preserved and restored for the sake of American freedom. As

the Founders understood, liberty depends on the proper balance of power among the

people, their local and state governments, and the federal government. AAF files this

brief on behalf of its 1,493 members in Massachusetts and its 2,842 members in the

First Circuit.

Amici American Encore; Americans for Limited Government; Catholics Count;

Eagle Forum; Eagle Forum of Georgia; Family Institute of Connecticut Action;

Charlie Gerow; International Conference of Evangelical Chaplain Endorsers;

JCCWatch.org; Tim Jones, Former Speaker, Missouri House, Chairman, Missouri

1
Appellee and Defendants-Appellants have consented to the filing of this amicus
brief. Counsel for interested party Ligand Pharmaceuticals, Inc. did not respond to
an initial or a follow up request for consent. No counsel for a party other than AAF
authored this brief in whole or in part, and no counsel or party other than AAF made
a monetary contribution intended to fund the preparation or submission of this brief.
No person other than amicus or its counsel made a monetary contribution to its
preparation or submission.
2
Edwin J. Feulner, Jr., Conservatives Stalk the House: The Story of the Republican
Study Committee, 212 (Green Hill Publishers, Inc. 1983).

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Center-Right Coalition; Men and Women for a Representative Democracy in

America, Inc.; New Jersey Family Policy Center; Melissa Ortiz, Principal &

Founder, Capability Consulting; Project 21 Black Leadership Network; Pro-Life

Wisconsin; Pamela S. Roberts, Immediate Past President- Kentucky Federation of

Republican Women; Rick Santorum; Setting Things Right; 60 Plus Association;

Stand for Georgia Values Action; Tea Party Express; Tea Party Patriots Action, Inc.;

The American Association of Senior Citizens; Women for Democracy in America,

Inc.; Yankee Institute; Young Conservatives of Texas; and Young America’s

Foundation believe that freedom depends on government that is properly constrained

so that the rights of the people are secure not only against private actors but against

government itself.

INTRODUCTION AND SUMMARY OF THE ARGUMENT

In this case, an agency that writes its own laws, enforces those laws, judges

its own enforcement actions, and has an annual budget of multiple billions of dollars,

brought significant and potentially ruinous charges against an individual and his

investment group. This action threatened massive financial penalties and lifetime

prohibitions from certain First Amendment activities. Yet despite the imbalance of

power, funding, and potential consequences, that individual, Father Emmanuel

Lemelson, chose to defend himself in court. With all of its resources and expertise,

the Securities and Exchange Commission failed to convince a jury of most of its

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charges against Father Lemelson, including charges that he had engaged in an

intentional scheme to defraud investors. SEC v. Lemelson, No. 18-11926, 2024 WL

3507495, at *1 (D. Mass. July 23, 2024). The jury only found that on three instances,

he made material misstatements concerning Ligand, the pharmaceutical company

the stock value of which he was discussing. Id. at *1-2. The jury found he was not

engaged in a scheme to defraud and did not violate the Investment Advisers Act. Id.

at *1.

Rather than the seven-figure sum the SEC sought, the court awarded only a

$160,000 penalty against Father Lemelson, still a large fine though significantly less

than the SEC was seeking. See id. at *1-3. Father Lemelson later sought attorney’s

fees from the SEC to cover the more than $1,500,000 cost of legal representation

amassed over the decade-plus battle with the administrative behemoth. See id. at *1.

The SEC rejected his claim.

Father Lemelson and those like him face a choice when presented with an

SEC enforcement action: defend their rights against claims that are often meritorious

but may just as well be abusive, or take any settlement offer made by the SEC. If the

SEC does not cover Father Lemelson’s legal expenses, innocent targets of SEC

investigation may well look at his case and conclude that legal fees potentially

comparable to what the SEC is seeking in damages and a yearslong legal fight are

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not worth the risk and hassle. Better to just take the SEC’s “offer he can’t refuse”3

than face the fight.

The Constitution distributes the three powers of government among three

separate, coequal branches as one precaution against the kind of abuse a ruling for

the SEC in this case would facilitate. The SEC, like many other administrative

agencies, exercises all three powers of government without meaningful limits. The

SEC can create regulations which have the force of law, enforce those regulations

without constitutionally sufficient presidential control, and can often bring those

enforcement actions before its own kangaroo courts. See SEC v. Jarkesy, 144 S. Ct.

2117, 2139 (2024) (holding that defendants facing fraud suits have a right to trial by

jury before a neutral adjudicator).

According to then-SEC Commissioner Edward Fleischman, “the true life

force of a fourth branch agency is expressed in a commandment that failed,

presumably only through secretarial haste, to survive the cut for the original

decalogue: Thou shalt expand thy jurisdiction with all thy heart, with all thy soul and

with all thy might.”4 In that regard the SEC has been something of a religious zealot,

especially in recent years. The SEC’s commitment to the eleventh commandment

3
The Godfather (Paramount Pictures 1972).
4
Edward H. Fleischman, Commissioner, SEC, Address to the Women in Housing
and Finance, The Fourth Branch at Work, (November 29, 1990)
https://www.sec.gov/news/speech/1990/112990fleischman.pdf.

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justifies judicial skepticism of its claims here, especially given the fact that those

claims would degrade the rights of SEC targets.

Finally, the SEC’s refusal to cover Father Lemelson’s attorney’s fees will

further chill First Amendment activity because it will put on notice anyone interested

in speaking about the stock market that even an unintentional misstatement of fact

that is not shown to have caused any harm could nonetheless have devastating

personal consequences. Further, the SEC’s refusal to cover Father Lemelson’s

attorney’s fees will be particularly likely to remove risk-averse voices from the

public square.

For all of these reasons and because, as the Plaintiff shows, the SEC’s

interpretation of the Equal Access to Justice Act is both impractical and wrong-

headed, this Court should rule for the Plaintiff and award attorney’s fees.

ARGUMENT

I. The Constitution Separates the Powers of Government to Ensure the Rule

of Law and Thereby Protect the Rights of the People.

The founding generation understood the purpose of government to be the

protection of individual rights. Because government can violate individual rights,

the Framers understood that government itself had to be restrained. The

constitutional separation of powers was implemented as just such a protection.

The rights of individuals pre-exist government and come from man’s Creator.

The Declaration of Independence, which imbues meaning into the Constitution,

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expresses the fundamental philosophy of American government: “Governments are

instituted among Men” to secure “certain unalienable rights,” which come from

man’s Creator and among which “are Life, Liberty, and the pursuit of Happiness.”

The Declaration of Independence para. 2 (U.S. 1776).5 These provisions of the

Declaration of Independence “refer[] to a vision of mankind in which all humans are

created in the image of God and therefore of inherent worth.” Obergefell v. Hodges,

576 U.S. 644, 735 (2015) (Thomas, J., dissenting).

The Constitution, “like the Declaration of Independence before it—was

predicated on a simple truth: One's liberty, not to mention one's dignity, was

something to be shielded from—not provided by—the State.”6 Obergefell, 576 U.S.

5
The Declaration, though perhaps revolutionary in its clarity and universality, was
not espousing entirely new ideas. Rather, it echoes the reasoning of William
Blackstone and John Locke, among others. According to Blackstone, absolute rights
are those “which are such as appertain and belong to particular men, merely as
individuals or single persons.” 1 W. Blackstone, Commentaries on the Laws of
England 119 (1765). The Declaration shows its indebtedness to the ideas of Locke,
who wrote, “no one ought to harm another in his life, health, liberty, or possessions:
for men being all the workmanship of one omnipotent, and infinitely wise maker; all
the servants of one sovereign master, sent into the world by his order, and about his
business” are “made to last during his, not one another’s pleasure.” John Locke,
Second Treatise on Government, § 6 at 9 (C.B. Macpherson ed. 1980). See,
generally, Jeffery Rosen, The Pursuit of Happiness: How Classical Writers on
Virtue Inspired the Lives of the Founders and Defined America (Simon & Schuster
2024).
6
“The American Founders understood that there was nothing distinctly American
then about the idea of a rule of law, or the principles that barred ex post facto laws,
or established the wrongness of bills of attainder. They understood that these
principles would not be brought into being by the Constitution they were framing.
Those principles had to be in place as we were guided in the framing of a legal

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at 736 (Thomas, J., dissenting). The Ninth Amendment reinforces the idea that rights

pre-exist government. U.S. Const. amend IX (“The enumeration in the Constitution,

of certain rights, shall not be construed to deny or disparage others retained by the

people.”). In other words, the people were to retain their pre-existing rights, both

enumerated and unenumerated, under the new government.

The Founder’s view of government “was rooted in a general skepticism

regarding the fallibility of human nature.” See INS v. Chadha, 462 U.S. 919, 949

(1983). In a state of anarchy,7 the rights of individuals are real, but are subject to

violation by the strong. Under a government, the rights of individuals are real but

are subject to the whims of those exercising governmental power. According to

Montesquieu, “constant experience shows us that every man invested with power is

apt to abuse it, and to carry his authority as far as it will go.” 8 In thousands of years

of recorded human history, that nature has not changed.9

structure. The Founders knew they could draw then on what Blackstone called the
‘laws of Nature and reason.’ In that vein, Jefferson famously remarked that
everything was changeable in human affairs, except the unalienable rights of
mankind. Those were not subject to change, because they were rooted in something
enduring either in the nature of man or in the principles of right themselves.” Hadley
Arkes, A Natural Law Manifesto or an Appeal from the Old Jurisprudence to the
New, 87 Notre Dame L. Rev. 1245, 1248 (2013).
7
Cf., Thomas Hobbes, Leviathan.
8
Montesquieu, Spirit of the Laws, § 11.4 (Thomas Nugent trans. 1752) (1748).
9
See Jefferson, supra note 3, at 130 (“Human nature is the same on every side of
the Atlantic, and will be alike influenced by the same causes. The time to guard
against corruption and tyranny is before they shall have gotten hold on us. It is
better to keep the wolf out of the fold, than to trust to drawing his teeth and talons

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The Founders were familiar with the abuse of government power. The

“government [is] the greatest of all reflections on human nature[.]”10 As Madison

explained:

If men were angels, no government would be necessary. If angels were

to govern men, neither external nor internal controls on government

would be necessary. In framing a government which is to be

administered by men over men, the great difficulty lies in this: you must

first enable the government to control the governed; and in the next

place oblige it to control itself.11

Under proper government, the law—not the whims of the one, the few, or the

many—must rule. The Supreme Court in Yick Wo v. Hopkins, wrote that the idea of

a person’s rights held “at the mere will of another, seems to be intolerable in any

country where freedom prevails, as being the essence of slavery itself.” 118 U.S.

356, 370 (1886). If Father Lemelson in this case is not awarded attorney’s fees under

the Equal Access to Justice Act, it will send a clear message to future potential

plaintiffs facing the SEC that there is no escaping the whims of the SEC bureaucrats.

One cannot outlast or outspend the bureaucrats who have nothing personal at stake

in the case. One might as well take the settlement offer.

after he shall have entered.”).

10
The Federalist No. 51 at 349 (James Madison) (Jacob E. Cooke ed., 1961).
11
Id.

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II. The SEC’s Refusal to Comply with the Equal Access to Justice Act is
Consistent with its Recent Pattern of Seeking to Unconstitutionally
Expand its Power.

The SEC’s refusal to comply with the Equal Access to Justice Act is just the

latest in a “long train of abuses and usurpations.” The Declaration of Independence

para. 2. Since its inception, the SEC has been gradually siphoning more and more

legislative power from Congress while simultaneously limiting the ability of the

Judiciary to check infringements on Americans’ constitutional rights. This Court

should secure the rights of speakers against the taxpayer-funded juggernaut of the

administrative state. The SEC’s abuses are myriad and wide ranging. This case is

just another instance of that abusive pattern. Illustrative examples include the SEC’s

creation of the Consolidated Audit Trail (CAT), its promulgation of rules intended

to advance an environmental agenda at the expense of its role as a securities

regulator, and its employment of kangaroo courts for its own prosecutorial action.

In 2012, the SEC began planning the CAT, a data collection and surveillance

system that will aggregate every securities trade in the United States and match it to

personally identifiable information on both sides of the interaction.12 To create this

massive collection for the prying eyes of federal and quasi-regulatory agents, the

12
See generally Brief of Amici Curiae Advancing American Freedom, et al.,
Davidson v. Gensler, No. 6:24-cv-00197 (W.D. Tex.) available at
https://advancingamericanfreedom.com/davidson-v-gensler/.

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SEC—an agency purportedly of the Executive Branch—usurped for itself the

powers of the other two branches of government.

CAT depends on a usurpation of Congress’s power of the purse. “[T]he power

to tax involves the power to destroy.” McCulloch v. Maryland, 17 U.S. 316, 431

(1819). If the executive had unilateral authority to tax, fund, and enact laws, there

would be no sufficient check on an “excess of law making” and the accompanying

infringements on liberty. Id. (citing The Federalist No. 48, at 309–12 (J. Madison)).

As Madison wrote, “[t]here can be no liberty where the legislative and executive

powers are united in the same person, or body of magistrates.”13

The SEC subverts the purpose of this constitutional design by allowing the

CAT operating committee—a group chosen by participant self-regulatory

organizations, not Congress—to determine and issue fees to other participant

organizations and industry members. This funding structure allows the SEC to fund

and administer the CAT indefinitely without meaningful oversight either from the

constitutional branches of government or the people.

In addition to the legislative power concerns, CAT presents issues for judicial

power because its disclosure requirements constitute warrantless and suspicionless

13
The Federalist No. 47, at 251 (James Madison) (paraphrasing from
Montesquieu’s Spirit of Laws) (George W. Carey and James McClellan, eds., The
Liberty Fund 2001). With respect to “excess of lawmaking,” see generally, Neil
Gorsuch & Janie Nitze, Over Ruled: The Human Toll of Too Much Law (2024).

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searches and seizures in violation of the Fourth Amendment. The CAT entails initial

unreasonable mass seizures that allow the SEC and self-regulatory organizations to

perform suspicionless searches of people’s personal information included in their

securities records, without any judicial or legislative authorization. 17 C.F.R. §

242.613 (c)(2)-(8), (e)(2).

In another case of misaligned priorities, the SEC has recently turned its

attention not to fraud but to climate issues.14 On March 6, 2024, the SEC issued a

final rule that gives “climate issues . . . special treatment and disproportionate space

in Commission disclosures and managers’ and directors’ brain space.”15 The rule

requires many publicly traded corporations to report their climate-related risks and

greenhouse gas emissions as part of their financial disclosures. Petition for Review

at 26-30, Iowa v. United States Securities and Exchange Commission, No. 24-1522

(8th Cir. 2024). Vesting such significant authority in an agency runs counter to

constitutional limits. This climate disclosure rule’s purpose is not the facilitation of

14
See generally, Brief of Amici Curiae Advancing American Freedom et al.,
Diamond Alternative Energy v. Environmental Protection Agency, No. 24-7,
available at https://advancingamericanfreedom.com/diamond-alternative-energy-v-
environmental-protection-agency/.
15
Hester M. Pierce, Green Regs and Spam: Statement on the Enhancement and
Standardization of Climate-Related Disclosures for Investors (Mar. 6, 2024)
available at https://www.sec.gov/newsroom/speeches-statements/peirce-statement-
mandatory-climate-risk-disclosures-030624.

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financial disclosure; it is environmental regulation designed to manipulate the

behavior of corporations.

Beyond CAT and the climate disclosure rule, the SEC’s administrative law

judges (ALJs) usurped the proper role of judges under Article III of the Constitution

and continue to violate the separation of powers among the three branches.16 In SEC

v. Jarkesy, 144 S. Ct. 2117, 2124–25 (2024), the SEC brought an action against

respondents George Jarkesy and Patriot28, LLC, for alleged fraud. The matter was

adjudicated through the SEC’s in-house administrative process before one of their

ALJs, circumventing the federal courts that would have allowed Jarkesy to have a

jury trial. Id. In ruling that Jarkesy had a right to a jury trial in an Article III court,

the Supreme Court affirmed the importance neutral adjudication. Id. at 2139. The

separation of powers set forth in the Constitution does not “permit Congress to

concentrate the roles of prosecutor, judge, and jury in the hands of the Executive

Branch.” Id.

In this case, Father Lemelson amassed over $1,500,000 in legal fees defending

himself against the SEC. With such heavy costs, future victims of such agency action

will think twice about invoking their right to challenge administrative proceedings

16
See generally, Brief of Amici Curiae Advancing American Freedom et al., SEC
v. Jarkesy, No. 22-859 (Jun 27, 2024) available at
https://advancingstg.wpenginepowered.com/wp-content/uploads/2023/10/2023-10-
18-22-859-Jarkesy-AAF-Final.pdf.

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in federal court. Not enforcing the Equal Access to Justice Act would incentivize

such victims to settle and begrudgingly bow to the whims of the administrative state.

In sum, the CAT, the climate disclosure rule, and the widespread use of ALJs

all demonstrate the significant consolidation of legislative and judicial powers in the

SEC. Congress cannot deprive itself or the courts of their respective constitutional

responsibilities, particularly where individual rights are concerned. See United

States v. Fisher, 6 U.S. 358, 390 (“Where rights are infringed, where fundamental

principles are overthrown, where the general system of the laws is departed from,

the legislative intention must be expressed with irresistible clearness to induce a

court of justice to suppose a design to effect such objects.”). For that reason, this

Court ought to look to Father Lemelson’s case with extra scrutiny and ensure that

the SEC abides by the Equal Access to Justice Act, thus reinforcing that the agency

is subject to the rule of law.

III. The SEC’s Refusal to Cover Father Lemelson’s Attorney’s Fees Will
Chill Future First Amendment Activity.

As the Supreme Court has long recognized, “First Amendment freedoms need

breathing space to survive.” Ams. for Prosperity Found. v. Bonta, 141 S. Ct. 2373,

2384 (2021) (quoting NAACP v. Button, 371 U.S. 415, 433 (1963)). “Although the

First Amendment applies most straightforwardly to government regulations that

directly restrict speech, th[e Supreme] Court has recognized that ‘constitutional

violations [can also] arise from the deterrent, or 'chilling,' effect of governmental

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regulations.’” Speech First, Inc. v. Sands, No. 23-156, 3 (U.S. Mar. 4, 2024)

(Thomas, J., dissenting from denial of certiorari) (quoting Laird v. Tatum, 408 U.S.

1, 11 (1972) (second alteration in original). “After all, ‘the threat of invoking legal

sanctions and other means of coercion, persuasion, and intimidation’ may cause self-

censorship in violation of the First Amendment just as acutely as a direct bar on

speech.” Id. (quoting Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 67 (1963)).

Risk is always part of investment. The SEC’s prosecution here, and especially its

unwillingness to pay Father Lemelson’s attorney’s fees, will likely drive a particular

type of perspective out of the public square: the relatively risk-averse perspective.

Those more willing to take risks in the stock market are likely to be more willing to

encourage others to do so. Those investors are also more likely to be willing to take

risks in terms of SEC enforcement. On the other hand, those who are more risk-

averse may well see the risk of enforcement as too great given the potentially

financially ruinous consequences, win or lose, and thus be more likely to choose not

to speak at all, depriving the public of a potentially valuable perspective.

The district court in Father Lemelson’s case suggested that “meaningful

cautionary statements and specific warnings of the risks involved” could prevent

misstatements from being material and thus allow the speaker to avoid the liability

Father Lemelson faced here. See SEC v. Lemelson, 532 F. Supp. 3d 30, 41 (D. Mass.

2021) (internal quotation marks omitted) (quoting Saltzberg v. TM Sterling/Austin

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Assocs., Ltd., 45 F.3d 399, 400 (11th Cir. 1995)). Such disclosures would,

themselves, potentially unduly burden the First Amendment speech rights of

speakers. Further, without clear guidelines as to when such disclaimers can protect

a speaker from liability, it is likely that risk averse speakers will be inclined to self-

censor.

The Constitution that protects Americans’ speech also established structures

designed to protect that and other rights against tyranny. The SEC has systematically

circumvented those limitations, exposing Americans to a string of abuses. The SEC

should return its focus to the task it was created to accomplish, fighting fraud and

ensuring that corporations disclose material information to potential investors.

CONCLUSION

This Court should rule for Defendants-Appellants.

Respectfully submitted,

/s/ J. Marc Wheat

J. Marc Wheat
Advancing American Freedom, Inc.
801 Pennsylvania Avenue, N.W.
Suite 930
Washington, D.C. 20004
(202) 780-4848
[email protected]

Counsel for Amicus Curiae

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CERTIFICATE OF COMPLIANCE

Pursuant to Fed. R. App. P. 32(g), I hereby certify that this document complies with the

type-volume limitations set forth in Fed. R. App. P. 32(a)(7)(B) because, excluding the parts of

the document exempted by Fed. R. App. P. 32(f), this document contains 3,628 words.

I further certify that this document complies with the typeface requirements of Fed. R.

App. P. 32(a)(5) and the type-style requirements of Fed. R. App. P. 32(a)(6) because this

document has been prepared in a proportionally spaced typeface using Microsoft Word 2016 in a

14-point Times New Roman font.

Dated: December 4, 2024

/s/ J. Marc Wheat

J. Marc Wheat

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Case: 24-1754 Document: 00118222062 Page: 24 Date Filed: 12/04/2024 Entry ID: 6685567

CERTIFICATE OF SERVICE

I hereby certify that on this same date, I electronically filed the foregoing document with

the United States Court of Appeals for the First Circuit by using the CM/ECF system, which

electronically served a copy on all counsel of record.

Dated: December 4, 2024

/s/ J. Marc Wheat
J. Marc Wheat

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