Opinion ID: 166597
Heading Depth: 4
Heading Rank: 1

Heading: Disclosure of the Payment

Text: 41 It is undisputed that the government has an interest in protecting consumers from being misled. Illinois, ex rel. Madigan v. Telemarketing Assocs., 538 U.S. 600, 612, 123 S.Ct. 1829, 155 L.Ed.2d 793 (2003) ([T]he First Amendment does not shield fraud.). Section 17(b) directly advances this interest because investors—such as the listeners to Wenger's radio program and readers of his newsletter who testified in this case—base their decisions whether to buy a stock in part on whether various opinions about the product are self-serving or not. By requiring publicists to disclose their interests, the government prevents investors from mistaking self-interested for disinterested advice. And as the Supreme Court suggested in Lowe, the dangers of fraud, deception, or overreaching are present not only in publicity that contain[s] any false or misleading information, but also in publicity that is designed to tout any security in which [publicists] ha[ve] an interest. Lowe, 427 U.S. at 209-10, 96 S.Ct. 2586. 42 The disclosure requirement imposed by Section 17(b) is thus reasonably related to the goal of fraud prevention. A publicist who fails to disclose that he has an interest in the companies he promotes will almost always mislead his audience into thinking that his advice is disinterested. Similarly, we are influenced by the fact that the disclosure requirement applies only to those securities that a promoter has been paid to tout. The fact that the promoter must provide a disclaimer as to each security he touts at the time he promotes the security is only a minimal burden imposed by the statute. 43 Therefore, to the extent Section 17(b) requires stock publicists to disclose that they are receiving consideration from the companies they are promoting, it is tailored to prevent fraud and does not offend the First Amendment.