Case Name: SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellant-Cross-Appellee, v. Christopher L. LOWE et al., Defendants-Appellees-Cross-Appellants
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1984-01-18
Citations: 725 F.2d 892
Docket Number: Nos. 106, 173, Dockets 83-6108, 83-6116
Parties: SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellant-Cross-Appellee, v. Christopher L. LOWE et al., Defendants-Appellees-Cross-Appellants.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 725
Pages: 892–910

Head Matter:
SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellant-Cross-Appellee, v. Christopher L. LOWE et al., Defendants-Appellees-Cross-Appellants.
Nos. 106, 173, Dockets 83-6108, 83-6116.
United States Court of Appeals, Second Circuit.
Argued Sept. 19, 1983.
Decided Jan. 18, 1984.
Jacob H. Stillman, Associate Gen. Counsel, S.E.C., Washington, D.C. (Daniel L. Go-elzer, Alan Rosenblat, David Sirignano, W. Robert Gray, Paul Gonson, Washington, D.C., of counsel), for plaintiff-appellant-cross-appellee.
Michael E. Schoeman, Schoeman, Marsh, Updike & Welt, New York City (Elizabeth H. Cooper, David A. Newberg, New York City, of counsel), for defendants-appellees-cross-appellants Lowe.
Before OAKES and VAN GRAAFEILAND, Circuit Judges, and BRIEANT, District Judge.
Of the Southern District of New York, sitting by designation.

Opinion:
OAKES, Circuit Judge;
An investment adviser registered under the Investment Advisers Act of 1940 was convicted on three different occasions of serious misconduct in connection with his investment advisory business. Pursuant to the Act, the Securities and Exchange Commission revoked his registration because of his convictions. He has nevertheless continued to publish and sell newsletters containing investment advice, in violation of the Act's requirement of registration. The interesting, if not altogether unique, question presented by this case is whether the publication of such advice is protected by the First Amendment so as to preclude the SEC from seeking to enjoin its continuance.
FACTS
Christopher L. Lowe is the president of the three corporate entities involved in this case: Lowe Management Corp., Lowe Publishing Corp., and Lowe Stock Chart Service, Inc. Between March, 1974, and May, 1981, Lowe Management was registered with the SEC as an investment adviser pursuant to Section 203(c) of the Investment Advisers Act, 15 U.S.C. § 80b-3(c) (1976). As such it published investment advice and managed and had custody of the funds of its clients on a discretionary basis.
In 1977, Lowe was convicted of two New York misdemeanors relating to his investment advisory business. He pleaded guilty to making false representations to a client that $2,200 had been invested for his benefit and a 27% return earned, when in fact Lowe had misappropriated the funds for his own use. He also pleaded guilty to failing to register in New York State as an investment advisor.
In 1978 Lowe was convicted of two New York felonies. He pleaded guilty to tampering with physical evidence, involving the alteration of a copy of a $10 money order to have it appear to be for the amount of $10,000. In addition, he pleaded guilty to third degree larceny for fraudulently drawing checks on an account to which worthless checks had been deposited. For these convictions Lowe received a prison sentence and was ordered to make restitution to the client.
As a result of these convictions the SEC instituted administrative proceedings under Section 203 of the Investment Advisers Act, 15 U.S.C. § 80b-3(e) & (f) (1976), against Lowe and Lowe Management. The Commission found that Lowe had aided and abetted willful violations of the antifraud provisions of the Act, violated the reporting provisions of the Act, and failed to amend Lowe Management's investment advisory registration form to report the convictions which related to his conduct as an investment adviser. In assessing sanctions the Commission found that Lowe's conduct "could hardly be more serious[,] . reflecting] a callous disregard" for the high fiduciary standards required of an investment adviser, and that the criminal conduct "clearly demonstrate!/!] his total lack of fitness to remain in 'an occupation which can cause havoc unless engaged in by those with appropriate background standards.' " In re Lowe Management Corp., SEC Investment Advisers Act of 1940 Release No. 759 (May 11, 1981) (quoting Marketlines, Inc. v. SEC, 384 F.2d 264, 267 (2d Cir.1967), cert. denied, 390 U.S. 947, 88 S.Ct. 1033, 19 L.Ed.2d 1137 (1968)). The Commission rejected the argument that sanctions were unnecessary because Lowe and his advisory corporation no longer handled clients' funds or securities, but only provided investment advice by publication. Noting that even these activities "afford numerous 'opportunities for dishonesty and self-dealing,' " id. at 5, the Commission revoked the registration of Lowe Management as an investment adviser and barred Lowe from association with any investment adviser. Lowe did not seek judicial review of the Commission's order.
Lowe's criminal activities did not end here, however. In 1982 he pleaded guilty to two charges under New Jersey law of theft by deception in the third degree, for fraudulently misrepresenting that checks drawn on his personal and one of Lowe Publishing's accounts were good and negotiable. For these activities he was sentenced to a three-year prison term and probation, and ordered to make restitution of over $27,000 to the defrauded banks.
Despite the Commission's order of May 11, 1981, revoking Lowe's registration as an investment adviser and barring him from association with any investment adviser, Lowe has published and distributed two investment advisory services, the Lowe Investment and Financial Letter and the Lowe Stock Advisory, and solicited subscriptions for a third one, the Lowe Stock Chart Service. He is president, research chairman, and editor of all three services, and his corporations, Lowe Management, Lowe Publishing, and Lowe Service were the publishers of the newsletters. In addition, Lowe has offered a recorded telephone "hot-line" service to subscribers of six months or more. Despite these activities, he has not applied to register either himself or any of the corporations as an investment adviser.
The Lowe Letter has had from 3,000 to 19,000 clients, with an average of about 5,000. Subscriptions cost $39 for one year or $79 for three years. A typical Lowe Investment and Financial Letter gives a short-term and long-term forecast. It offers advice on the relative desirability of investing in, among other things, stocks, Treasury bills, and money market funds, and describes rather generally the state of the market. It recommends particular stocks and groups of stocks for purchase or sale, discusses precious metals, and announces special reports and the telephone hot-line service.
The Lowe Stock Advisory has only a few hundred subscribers and a number of readers who receive complimentary subscriptions. Subscriptions cost the same as do those to the Lowe Investment and Financial Letter. The Stock Advisory is typically somewhat more specific, however, with a brief introductory examination of general market trends followed by specific purchase, sale, and hold recommendations, particularly for low-priced stocks. The Lowe Stock Chart Service has solicited subscriptions, but has never been published.
No contention is made that any of the information published in the advisory services has been false or materially misleading. Nor is it alleged that Lowe himself, unlike the investment adviser in SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963), has profited through personal or corporate investments from the investment advice rendered.
THE DECISION OF THE DISTRICT COURT
The United States District Court for the Eastern District of New York, Jack B. Weinstein, Chief Judge, believed that the Investment Advisers Act could not be construed to permit the SEC to revoke Lowe's registration as an investment adviser, and thus to bar him from publishing his newsletters, without violating the First Amendment. The court first analyzed the case on the assumption that the Lowe publications constituted commercial speech and thus were not entitled to the full protection of the First Amendment. See In re R.M.J., 455 U.S. 191, 200-01, 102 S.Ct. 929, 935-986, 71 L.Ed.2d 64 (1982) (advertising by lawyers). It found, nevertheless, that "the censorship that the SEC would impose on Lowe is more extreme than necessary to effectuate the congressional goal of a confident and informed investing public," and amounted to an unconstitutional prior restraint on the basis of "speculative assessments." In reaching this conclusion the court apparently thought that the fact of Lowe's past misconduct was not in itself enough to make his future speech "potentially misleading" and consequently subject to restraint. See Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 563-64, 100 S.Ct. 2343, 2350, 65 L.Ed.2d 341 (1980).
The court went on to suggest, however, that the case actually fell "outside the rubric of commercial speech." Although recognizing that the Supreme Court had never explicitly so held, Judge Weinstein stated that commercial speech consisted only of advertising, citing Ad World, Inc. v. Township of Doylestown, 672 F.2d 1136, 1140 (3d Cir.1982) (citing Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations, 413 U.S. 376, 93 S.Ct. 2553, 37 L.Ed.2d 669 (1973)), cert. denied, 456 U.S. 975, 102 S.Ct. 2240, 72 L.Ed.2d 850 (1982). As a result, he believed that Lowe's newsletters were fully protected by the First Amendment, and that their "combination of fact, economic and political analyses, conjecture, and recommendation characteristic of investment newsletters . raises unanswered questions concerning the conditions, if any, under which an absolute restraint may constitutionally be imposed upon them.
Rather than rule the Act unconstitutional, however, the district court construed the Act's definition of an "investment adviser" so as to avoid possible infringement on freedom of the press. It did so by distinguishing personal or "person-to-person" advice from "impersonal" investment advice given in publications. The court evidently reasoned that "strong sanctions in the way of prior restraints" may be invoked against persons providing "personal" investment advice since that activity involves "delegations of trust and responsibility," but may not be invoked when the investment advice is provided by publication or writing. Accordingly, the court entered a limited injunction enjoining defendants from rendering personal investment advice "by telephone, individual letter or in person." As to "impersonal" advice, the court believed that disclosure, rather than denial or revocation of registration, was the only constitutionally permissible means of protecting the public.
In effect the court construed the Act so as to deny the SEC the authority to revoke a publisher's registration solely on the basis of past misconduct. Under this interpretation, a person whose registration is otherwise revoked may nevertheless remain registered as an investment adviser for the limited purpose of publishing so long as the publication is done "impersonally." A letter to several people rather than to an individual is thus differentiated. Somewhat inconsistently, perhaps, the district court treated Lowe's recorded hot-line telephone message as rendering "personal" rather than "impersonal" advice.
DISCUSSION
We do not believe that the Investment Advisers Act may be rewritten as the district court would rewrite it. The Act does not distinguish between "personal" and "impersonal" advice, but rather between publications or writings "as to the value of securities or as to the advisability of investing in, purchasing, or selling securities," on the one hand, and "bona fide newspapers], news magazine[s], or business or financial publication^] of general and regular circulation," on the other. 15 U.S.C. § 80b-2(a)(ll) (1976). The SEC quite properly determined that the Lowe advisory letters and services were the former, and that Lowe and his corporations were "engag[ing] in the business of advising others, either directly or through [such] publications or writings.... " Id.
The statute specifically grants the SEC the power to revoke the registration of any investment adviser convicted of certain crimes, among these the crimes for which Lowe was convicted. 15 U.S.C. § 80b-3(e)(2). Accordingly, we believe that the SEC was well within its statutory authority when it revoked Lowe's registration. Unlike the district court, we do not believe that this statutory authority violates the First Amendment.
The Act
The Investment Advisers Act of 1940 was "the last in a series of Acts designed to eliminate certain abuses in the securities industry, abuses which were found to have contributed to the stock market crash of 1929 and the Depression of the 1930's." SEC v. Capital Gains Bureau, 375 U.S. 180, 186, 84 S.Ct. 275, 280, 11 L.Ed.2d 237 (1963). The Act was the result of a study undertaken by the SEC at the direction of Congress to investigate "the functions and activities of investment trusts and investment companies.... " Section 30 of the Public Utility Holding Company Act of 1935, 15 U.S.C. § 79z-4 (1976). The SEC submitted to Congress a memorandum questioning "the good faith of some of the less reputable of these generalized investment services." Hearings on S. 3580 Before a Subcommittee of a Senate Committee on Banking and Currency, 76th Cong., 3d Sess. 47 (1940) at 1008. It emphasized the potential for abuse if persons in the business of publishing investment advice were willing to "lend[] themselves to the use of stock market promoters and manipulators." Id. (quoting Twentieth Century Fund, Inc., The Security Markets 692 (1935)).
On the basis of the SEC's report and other information before it, Congress found that investment advisers were "of national concern" and that "their advice, counsel, publications, writings, analyses, and reports . . occur in such volume as substantially to affect interstate commerce, national securities exchanges, and other securities markets, the national banking system and the national economy." Section 201 of the Investment Advisers Act, 15 U.S.C. § 80b-l (emphasis added). In so finding, Congress hearkened back to Section 17(b) of the Securities Act of 1933, in which it prohibited the publication of any letter or investment service which describes a security without disclosing that the publisher has been compensated for such publicity, and to concerns expressed in the Senate Report accompanying the passage of the Securities Exchange Act of 1934. 15 U.S.C. § 77q(b) (1976) and S.Rep. No. 792, 73d Cong., 2d Sess. 8 (1934).
The Investment Advisers Act makes it unlawful for an unregistered investment adviser to make use of the mails or any means of interstate commerce in connection with his or its business as an investment adviser. 15 U.S.C. § 80b-3(a). The Act defines "investment adviser" broadly to include
any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports containing securities....
15 U.S.C. § 80b-2(a)(11) (emphasis added). The section exempts from the definition of an investment adviser "the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation.... " Id. Section 203 provides for registration of investment advisers and gives the SEC powers of censure, denial, or suspension of registration. 15 U.S.C. § 80b-3(e). The SEC can censure an investment adviser, or suspend or revoke his registration if the adviser or any person associated with him has been convicted within ten years of certain felonies or mis demeanors. The SEC invoked this statutory scheme to revoke the registration of Lowe Management and bar Christopher Lowe from publishing investment advice or associating with an investment adviser.
The Act's Application to the Lowe Newsletters
The first step in our analysis of this case is determining whether Lowe's newsletters are within the statutory definition of investment adviser and thus subject to the registration requirement, or whether they are "bona fide newspapers" and thus exempt from the requirement. The leading case construing the exclusion for bona fide newspapers is this circuit's SEC v. Wall Street Transcript Corp., 422 F.2d 1371 (2d Cir.1970), cert. denied, 398 U.S. 958, 90 S.Ct. 2170, 26 L.Ed.2d 542 (1970). The Wall Street Transcript was a weekly tabloid which sold for $5 an issue or $180 per year. The Transcript consisted primarily of reports on specific securities, each of which was identified with the name and address of a broker/dealer firm. It also printed some management speeches, miscellaneous personnel announcements, editorials, and advertisements. This court held that the Transcript was not per se a "bona fide newspaper" or "financial publication of general and regular circulation" so as to be excluded from the definition of investment adviser. It stated that "[t]he phrase 'bona fide' newspaper . means those publications which do not deviate from customary newspaper activities to such an extent that there is a likelihood that the wrongdoing which the Act was designed to prevent has occurred." 422 F.2d at 1377. Rather than looking to the purely formal "indicia" of a newspaper, the court examined the substance and content of the publication and found that "[m]ost of its published material consists of reprinted reports assessing various securities issues." 422 F.2d at 1378. It held that "[t]his characteristic emphasis on particular issues and companies at the very least raises doubt about whether the Transcript is outside the exclusion — a suspicion which we believe that the S.E.C. should be allowed to investigate." Id.
The Wall Street Transcript presented a much closer case for. exclusion under the Act than does the Lowe Investment and Financial Letter or the Lowe Stock Advisory. Lowe's newsletters quite clearly are "engagefd] in the business of advising others . as to the value of securities or as to the advisability of investing in, purchasing, or selling securities . " 15 U.S.C. § 80b-2(11). Under the test of Wall Street Transcript, it is equally clear that Lowe's publications are not engaged primarily in "customary newspaper activities," but rather in the activities that the Investment Adviser Act is intended to regulate. Thus, we hold that the SEC properly determined the registration requirements of the Act to be applicable to Lowe's newsletters.
First Amendment Concerns
Wall Street Transcript held that the Investment Advisers Act does not on its face abridge freedom of the press. In reaching this conclusion, the court stated that
it is not necessary to enlarge the category of "bona fide" newspapers into an exclusion for all publications which could conceivably be brought within the term "typical newspaper" in order to avoid the "seeds of a constitutional controversy" which the appellee argues would result from an attempt to regulate the conduct of any newspaper publisher.
422 F.2d at 1378-79. Nor did the court believe that it had "to base a construction of the Act on the assumption that the activities involved in giving commercial investment advice are entitled to the identical constitutional protection provided for certain forms of social, political or religious expression." Id. at 1379. Instead, the court reasoned that it need only delineate "a boundary between the special type of 'merchandising' activities which must lead to registration and the publication of expression which lies beyond the Act's regulatory purposes." Id. In reaching this conclusion, the court cited comments by Justice Harlan in Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). See 422 F.2d at 1379. In that case, Justice Harlan said:
A business "is not immune from regulation because it is an agency of the press. The publisher of a newspaper has no special immunity from the application of general laws . " Federal securities regulation, mail fraud statutes, and common-law actions for deceit and misrepresentation are only some examples of our understanding that the right to communicate information of public interest is not "unconditional." (Citations and footnotes omitted).
388 U.S. 130, 150, 87 S.Ct. 1975, 1989, 18 L.Ed.2d 1094 (1967). Accordingly, the court held that the registration provisions of the Investment Advisers Act did not violate the First Amendment. 422 F.2d at 1379-80.
The appellees argue that Wall Street Transcript is inapplicable to this case because it was decided prior to Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976). In Virginia Pharmacy, the Court invalidated a Virginia statute prohibiting pharmacists from advertising their prices, pointing out that the right to distribute and receive information affecting decisions to buy and sell must be protected in a free society. "[T]he free flow of commercial information is indispensable . to the proper allocation of resources in a free enterprise system . [and] to the formation of intelligent opinions as to how that system ought to be regulated or altered." Id. at 765, 96 S.Ct. at 1827. See also Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 562, 100 S.Ct. 2343, 2349, 65 L.Ed.2d 341 (1980) (rejecting "the 'highly paternalistic' view that government has complete power to suppress or regulate commercial speech"), and Bates v. State Bar of Arizona, 433 U.S. 350, 383, 97 S.Ct. 2691, 2708-2709, 53 L.Ed.2d 810 (1977) (advertising by attorneys not subject to "blanket suppression," though false, deceptive, or misleading advertising may be suppressed).
We believe that Wall Street Transcript still states good law. Indeed, the Supreme Court has affirmed its essential rationale since its decision in Virginia Pharmacy. In Ohralik v. Ohio State Bar Association, for example, the Court stated that government "does not lose its power to regulate commercial activity deemed harmful to the public whenever speech is a component of that activity." 436 U.S. 447, 456, 98 S.Ct. 1912, 1919, 56 L.Ed.2d 444 (1978) (emphasis added). The Court noted
[n]umerous examples . of communication that are regulated without offending the First Amendment, such as the exchange of information about securities, SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (CA2 1968), cert. denied, 394 U.S. 976 [89 S.Ct. 1454, 22 L.Ed.2d 756] (1969), corporate proxy statements, Mills v. Electric Auto-Lite Co., 396 U.S. 375 [90 S.Ct. 616, 24 L.Ed.2d 593] (1970), the exchange of price and production information among competitors, American Column & Lumber Co. v. United States, 257 U.S. 377 [42 S.Ct. 114, 66 L.Ed. 284] (1921), and employers' threats of retaliation for the labor activities of employees, NLRB v. Gissel Packing Co., 395 U.S. 575, 618 [89 S.Ct. 1918, 1942, 23 L.Ed.2d 547] (1969).
Id. It concluded that "[n]either Virginia Pharmacy nor Bates purported to cast doubt on the permissibility of these kinds of commercial regulation." Id. See also NAACP v. Claiborne Hardware Co., 458 U.S. 886, 102 S.Ct. 3409, 73 L.Ed.2d 1215 (1982); Jay Norris, Inc. v. FTC, 598 F.2d 1244, 1252 (2d Cir.1979), cert. denied, 444 U.S. 980, 100 S.Ct. 481, 62 L.Ed.2d 406 (1979); and Note, Peaceful Labor Picketing and the First Amendment, 82 Colum.L.Rev. 1469, 1484-88 (1982). Thus, considered in light of Virginia Pharmacy and its progeny, we believe that the provisions of the Investment Advisers Act at issue here are precisely the kind of regulation of commercial activity permissible under the First Amendment. Accordingly, we believe that the holding of Wall Street Transcript controls this case.
We find additional support for our conclusion in the Seventh Circuit's decision in Savage v. Commodity Futures Trading Commission, 548 F.2d 192 (7th Cir.1977) (opinion by Moore, J., of the Second Circuit, sitting by designation). Decided after Virginia Pharmacy, Savage nevertheless hewed to the Curtis Publishing Co./Wall Street Transcript viewpoint that a business is not immune from regulation merely because it is an agency of the press. Id. at 197. On facts closely analogous to those presented by this case, the court held that the publisher of the Commodity Exchange Bulletin, a newsletter containing views on the commodity market, was not entitled to registration under the Commodity Futures Trading Commission Act as a commodity trading adviser in view of his previous convictions for securities fraud and mail fraud arising out of the operations of a securities company.
The appellees would distinguish Savage on the basis that there the publisher erroneously argued that his commodities newsletter had only the limited protection of commercial speech. They contend that Savage was decided before the Supreme Court "clearly indicated" in Central Hudson Gas that commercial speech refers only to commercial advertising. They argue that under Central Hudson Gas "commercial speech" includes only direct product or service advertising and a seller's indirect or informational advertising. Since Lowe and his companies "do not sell investments [but] report and comment on the investments offered by others," the argument runs, newsletters are not commercial speech.
In our view, this argument is unconvincing. Unlike the Third Circuit in Ad World, Inc. v. Township of Doylestown, 672 F.2d 1136 (3rd Cir.1982), cert. denied, 456 U.S. 975, 102 S.Ct. 2240, 72 L.Ed.2d 850 (1982), and the court below, we do not believe that the Supreme Court has limited commercial speech solely to product or service advertising. In Bates v. State Bar of Arizona, the Court said that "[i]f commercial speech is to be distinguished, 'it must be distinguished by its content,' " not its form, 433 U.S. 350, 363, 97 S.Ct. 2691, 2699, 53 L.Ed.2d 810 (1977) (quoting Virginia Pharmacy, 425 U.S. at 761, 96 S.Ct. at 1825). Although Central Hudson Gas stated that "[t]he First Amendment's concern for commercial speech is based on the informational function of advertising," 447 U.S. at 563, 100 S.Ct. at 2350, the Court did not define commercial speech in these terms. Rather it defined commercial speech as "expression related solely to the economic interests of the speaker and its audience." Id. at 561, 100 S.Ct. at 2349. Similarly, in Friedman v. Rogers, the Court stated "[b]y definition, commercial speech is linked inextricably to commercial activity . " 440 U.S. 1, 10 n. 9, 99 S.Ct. 887, 894 n. 9, 59 L.Ed.2d 100 (1979). Cf. Bolger v. Youngs Drug Products Corp., — U.S. —, —, n. 14, 103 S.Ct. 2875, 2880-2881, n. 14, 77 L.Ed.2d 469 (1983) (expressing "no opinion as to whether reference to any particular product or service is a necessary element of commercial speech"). These definitions do not limit commercial speech to advertising and are broad enough to encompass Lowe's publications. Thus, although we think it preferable to analyze this case as one involving the permissible regulation of economic activity, we believe that the Investment Advisers Act withstands constitutional scrutiny under First Amendment doctrine relating to commercial speech as well.
Lowe and his companies argue that in view of the fact that the Commission has never challenged any of the substantive material contained in any of their publications, it may not "rely on the mere possibility of future deception as a ground for the outright prohibition of the publications even under a commercial speech analysis." In essence, they charge the SEC with impermissible prior restraint. Whether we approach this case emphasizing its aspect of the regulation of a profession or view its principal thrust as pertaining to commercial speech, this argument is unavailing.
Before the SEC may revoke an adviser's registration, the Investment Advisers Act requires a finding of misconduct reflecting adversely on the honesty of the adviser, an essential attribute of a person entrusted to deal with intangible products which have numerous, intricate facets as securities do. See 15 U.S.C. § 80b-3(e)(2). The appellees rely on such cases as Natco Theaters, Inc. v. Ratner, 463 F.Supp. 1124 (S.D.N.Y.1979), in arguing that a finding of past misconduct may not serve as the basis for revoking an investment adviser's license. But the regulation of advisory publishers is properly compared, we believe, not to the licensing of theater operators, but rather to the licensing of professionals. See, e.g., Ohralik v. Ohio State Bar Association, 436 U.S. at 460, 98 S.Ct. at 1920-1921; Watson v. Maryland, 218 U.S. 173, 177-78, 30 S.Ct. 644, 646-647, 54 L.Ed. 987 (1910); Dent v. West Virginia, 129 U.S. 114, 121-23, 9 S.Ct. 231, 233-234, 32 L.Ed. 623 (1889). The denial of a professional license for criminal conduct has been a traditional, and perhaps necessary, aspect of this type of regulation. Barsky v. Board of Regents, 347 U.S. 442, 451, 74 S.Ct. 650, 655, 98 L.Ed. 829 (1954); Doe v. Webster, 606 F.2d 1226, 1239 n. 51 (D.C.Cir.1979). Thus, we believe that the SEC may bar Lowe from the profession of investment adviser because of his past criminal conduct.
That commercial speech is involved leads to no different result. In Friedman v. Rogers, the Supreme Court found it irrelevant that the use of a trade name was "not in fact misleading" since it was a type of speech which "enhances the opportunity for misleading practices." 440 U.S. at 15, 99 S.Ct. at 897. As this court noted in Jay Norris, Inc. v. FTC, "[t]he prohibition in Friedman was a total ban on a business practice or form of advertising because of the potential for deception . " 598 F.2d at 1252 (emphasis added). Just as the potential for deception may justify the regulation of a profession, see, e.g., Ohralik, 436 U.S. at 461-62, 98 S.Ct. at 1921-1922, so, too, the potential for deception permits government to ban potentially deceptive commercial speech. See Friedman, 440 U.S. at 15, 99 S.Ct. at 897; Central Hudson Gas, 447 U.S. at 563-64, 100 S.Ct. at 2350. In light of Lowe's history of deceptive, criminal conduct as an investment adviser, his publications may fairly be characterized as potentially deceptive commercial speech.
The appellees would have the SEC wait until Lowe had committed further violations of the securities laws and then somehow punish him while apparently permitting him to continue publishing. Such a remedy would hardly be effective redress for the affected public. The regulation of professions is intended to prevent harm to the public before it occurs, not after it is done. Saying that appellees may not sell their views as to the purchase, sale, or holding of certain securities is no different from saying that a disbarred lawyer may not sell legal advice. Thus, we hold that the authority to revoke Lowe's registration as an investment adviser, and as a result to bar him from publishing his newsletters, does not violate the First Amendment.
Finally, we note what this holding does not entail. Lowe is not prohibited from publishing or stating his views as to any matter of current interest, economic or otherwise, such as the likelihood of war, the trend in interest rates, whether the next election will affect market conditions, or whether future enforcement of the Anti-Dumping Act to protect basic American smokestack industry from foreign competition is likely. He is not prohibited from publishing a newspaper of general interest and circulation. Nor is he prohibited from publishing recommendations in somebody else's bona fide newspaper as an employee, editor, or writer. What he is prohibited from doing is selling to clients advice and counsel, analysis and reports as to the value of specific securities or as to the advisability of investing in, purchasing or selling or holding specific securities.
Judgment reversed.
. N.Y.Gen.Bus.Law § 352-c (McKinney 1968); N.Y.Gen.Bus.Law § 359-eee (McKinney 1968).
. N.Y.Penal Law § 215.40 (McKinney 1975); N.Y.Penal Law § 155.30 (McKinney 1975).
. N.J.Stat.Ann. § 2C:20-4 (West 1982).
. The Commission may invoke the censure, suspension, and revocation provisions if it finds that such conviction
(A) involves the purchase or sale of any security, the taking of a false oath, the making of a false report, bribery, perjury, burglary, or conspiracy to commit any such offense.
(B) arises out of the conduct of the business of a broker, dealer, municipal securities dealer, investment adviser, bank, insurance company, or fiduciary;
(C) involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities; or
(D) involves the violation of section 152, 1341, 1342, or 1343 or chapter 25 or 47 of Title 18.
15 U.S.C. § 80b-3(e)(2).
. This view necessarily leads us to reject the appellees' contention that the Act violates equal protection by subjecting investment newsletters, but not bona fide newsletters, to regulation. In holding that the publication of investment advice is regulable commercial activity, we necessarily hold also that such newsletters may be treated differently from other publications. This court previously reached the same conclusion in Wall Street Transcript, 422 F.2d at 1378-79.
. Recent Supreme Court decisions suggest that a similar "middle level" protection is appropriate for certain kinds of speech, for example, in cases of regulation of commercial advertising (Virginia Pharmacy, 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976)); zoning of theaters which play "adult," but not obscene, films (Young v. American Mini Theatres, 427 U.S. 50, 96 S.Ct. 2440, 49 L.Ed.2d 310 (1976)); labor picketing regulation (NLRB v. Retail Store Employees Union, Local 1001, 447 U.S. 607, 100 S.Ct. 2372, 65 L.Ed.2d 377 (1980)); and the regulation of professions (Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 98 S.Ct. 1912, 56 L.Ed.2d 444 (1977)). Thus, whether we view this case as one involving commercial speech or the regulation of the professions, the Investment Advisers Act does not conflict with the First Amendment.
. We leave to another day the question whether a publication dealing only with market indicators generally or making recommendations only as to groups of securities (e.g., air transport, beverages-brewers, mobile homes) could be barred on facts such as those of this case.