SEC Clarifies New FOIA Exemption Amid Uproar over Wall Street Reform Act

"Section 929I changes that wording to read that the commission if exempt from disclosing “any records… if such records or information have been obtained by the commission for… surveillance, risk assessments or other regulatory and oversight activities.” 

Latte's question for the day: Did U.S. Financial Corporations request that Senate Conference Committee members insert language that would prevent attorneys (including state Attorney Generals) from gathering evidence in consumer protection litigation?

The Fox Business Network recently reported that language in the new financial reform law gives the U.S. Securities and Exchange Commission a broad exemption from the Freedom of Information Act (FOIA). 

 “This provision does not provide a ‘blanket’ SEC exemption from FOIA and is not designed to protect the SEC as an agency from public oversight and accountability,” SEC Chairman Mary Schapiro said in separate letters to the chairmen of the House Financial Services Committee and the Senate Banking Committee, which oversee the investor protection agency. A copy of the letter sent to the Rep. Barney Frank, the Massachusetts Democrat who chairs the House panel, was obtained by the Center for Public Integrity ." 

The FOIA was added by Senate negotiators to the final version of the financial reform legislation, according to Steven Adamske, spokesman for the House Financial Services Committee.The Senate and House judiciary committees, not the banking and financial panels that overhauled financial regulation, traditionally control FOIA rules. The Investment Company Act of 1940, which was incorporated into the 1960 FOIA law already exempts the SEC from disclosing audit records or internal compliance to the public.

The Reporters Committee for Freedom of the Press cautions that the under the language of the new exemption, the "SEC does not have to disclose information it obtains during those activities if it comes from regulated groups such as broker-dealers, investment companies and investment advisers."

U.S. Rep. Darrell Issa of California, the ranking Republican on the House Oversight and Government Reform Committee, said Thursday he would introduce a bill to repeal the provision.

 “Regardless of intent, both Democrats and Republicans alike should agree that we cannot allow this regulatory body that failed to catch Allen Stanford's fraud and Bernie Madoff's Ponzi scheme to operate in secrecy,” said Issa.

Latte Republic urges Representative Issa and his colleagues from both sides of the isle to repeal the provision.  

Additional Background Information: 

View letter to Barney Frank

Link  to COURT RECOGNIZES AN IMPLIED PRIVATE RIGHT OF ACTION UNDER THE INVESTMENT COMPANY ACT OF 1940