From SEC v. Pirate Investor LLC, 2009 U.S. App. LEXIS 20455 (4th Cir. Sept. 15, 2009):

In challenging the district court's scienter determination, Appellants contend that the First Amendment protections recognized by the Supreme Court in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), apply to this case. They claim that the SEC needed to prove by clear and convincing evidence that they acted with "actual malice." To support this claim, they direct us to Bose Corp. v. Consumers Union of United States, Inc. , 466 U.S. 485, 104 S. Ct. 1949, 80 L. Ed. 2d 502 (1984), a case involving the application of the New York Times standard to a product disparagement action.

In Bose, the Supreme Court was concerned with determining the proper standard of review for courts of appeals to apply when confronted with a district court finding that a particular statement was made with the "actual malice" required by New York Times. After determining that the Constitution requires independent appellate review of "[t]he question whether the evidence in the record in a defamation case is of the convincing clarity required to strip the utterance of First Amendment protection".... the Bose Court moved on to a review of the facts of that case and noted that "the only evidence of actual malice on which the District Court relied was the fact that the statement was an inaccurate description of what [the defendant] had actually perceived"..... The Bose Court then held that the defendant's statement fell within the protections afforded by the First Amendment....

Relying on the Bose Court's statement that "there is a significant difference between proof of actual malice and mere proof of falsity," ... Appellants argue that we cannot uphold the district court's resolution of the scienter issue because the district court "confused proof of falsity with proof of fault." ... They claim that there is no evidence in the record to support the district court's finding of scienter, absent the falsity of the claim that an insider provided the information on which they based the tip, and implore us to follow Bose's lead by holding that an absence of additional evidence of intent necessarily means that the clear and convincing evidence standard mandated by New York Times has not been satisfied.

...[W]e do not believe that the New York Times standard is applicable to this case. Thus, we reject Appellants' argument insofar as it relies on the mistaken belief that the SEC needed to prove intent by clear and convincing evidence, rather than under the preponderance of the evidence standard typically applicable to civil enforcement actions under § 10(b). Similarly, we reject the notion that independent appellate review of the district court's scienter determination is necessary under Bose and instead review the district court's finding that Appellants acted with scienter for clear error. See Merchant Capital, 483 F.3d at 766 (questions of scienter are reviewable under the clearly erroneous rule); see also Healey v. Chelsea Res., Ltd., 947 F.2d 611, 618 (2d Cir. 1991) ("Matters of misrepresentation, knowledge, reliance, causation, and scienter are questions of fact, and the trial court's findings as to those facts may not be set aside unless they are clearly erroneous.").

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Punishing fraud, whether it be common law fraud or securities fraud, simply does not violate the First Amendment. The Seventh Circuit has articulated this principle in Commodity Trend Serv., Inc. v. CFTC, 233 F.3d 981, 992 (7th Cir. 2000), explaining: "Laws directly punishing fraudulent speech survive constitutional scrutiny even where applied to pure, fully protected speech." The Supreme Court has stated the principle almost as directly: "[T]he First Amendment does not shield fraud." Illinois ex rel. Madigan v. Telemarketing Assocs., Inc., 538 U.S. 600, 612, 123 S. Ct. 1829, 155 L. Ed. 2d 793 (2003). Of course, the government cannot label certain speech as fraudulent so as to deprive it of its constitutional protections, ... but we need not worry about such strategic labeling here because § 10(b) clearly forbids actual fraud. Thus, Appellants' First Amendment argument fails.