On Oct. 4, 2010, President Barack Obama signed House Resolution 5924, the SEC Freedom of Information Restoration Act, into law. The new law repeals § 929I of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which had exempted the Securities and Exchange Commission (SEC) from complying with certain Freedom of Information Act (FOIA) requests.
The Dodd-Frank Act, Pub. Law No. 111-203, became law on July 21, 2010. Section 929I of the Act immediately came under fire as journalists and transparency advocates said that the SEC could use it to refuse to comply with FOIA requests if the requests sought records regarding the SEC's "surveillance, risk assessments, or other regulatory and oversight activities." The SEC used § 929I on July 27 to refuse a request by the Fox Business Network (FBN) for information regarding the Bernie Madoff case. On August 3, a consortium of 10 transparency groups sent a letter to Sen. Christopher Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), co-sponsors of the Dodd-Frank Act, calling for the repeal of 929I and citing concerns about the SEC's record of openness. For more on the incident involving FBN's information request and early criticism of the law, see "Transparency Advocates Protest SEC's New FOIA Exemption" in the Summer 2010 issue of the Silha Bulletin.
According to an October 6 report by the Reporters Committee for Freedom of the Press (RCFP), discussion of a repeal of the provision arose in July, when U.S. Rep. Darrell Issa (R-Calif.), Ranking Member of the House Oversight and Government Reform Committee, formally objected to it. Issa was joined by Rep. Ron Paul (R-Texas) and Senators Patrick Leahy (D-Vt.) and Ted Kaufman (D-Del.). The RCFP also reported that in a September 16 House Oversight and Government Reform Committee hearing, opponents of provision 929I argued that it was "too broad, thereby giving the SEC the power to refuse the disclosure of information that could be crucial to public oversight of the financial system and to prevent future financial crises." The Associated Press reported September 18 that SEC Chairman Mary Schapiro argued in the hearing that the SEC needed the exemption because, in some cases, firms would be reluctant to voluntarily provide information if they knew it could be viewed publicly, including by competitors.
The federal FOIA has nine exemptions, covering disclosures that could harm national security or "constitute a clearly unwarranted invasion of personal privacy," for example. Exemption 4, which extends to "trade secrets" or "privileged or confidential commercial or financial information obtained from a person" and Exemption 8, which protects information "contained in or related to examination, operating, or condition reports about financial institutions that the SEC regulates or supervises" were cited by transparency advocates who initially protested § 929I as providing enough protection for the SEC and businesses.
Rick Blum, coordinator of the advocacy group Sunshine in Government Initiative, told the RCFP on October 6 that the repeal of § 929I is a "very strong first step," but more reform will be needed. Blum told the RCFP that Exemption 8 "is broad and no one really knows what it means and the SEC has not [previously] overseen or monitored how Wall Street works."
In a September 23 statement, Issa said, "by repealing [§ 929I], we have reaffirmed our commitment to ensure that the SEC will be held to the highest possible standard of accountability and transparency."
- SARA CANNON
SILHA CENTER STAFF