Ted Kaufman - United States Senator for Delaware

Issa joins senators in questioning FOIA exemptions for SEC

Source: The Hill

By Vicki Needham

August 9, 2010

Another lawmaker has joined the chorus of those calling for changes to the new financial regulatory reform law that provides Freedom of Information Act (FOIA) exemptions for the Securities and Exchange Commission.

In a letter, Rep. Darrell Issa (R-Calif.) asked the SEC to provide documents and clarify the agency's responsibilities under FOIA.

He said the SEC has already tried to use the new provision, Section 929I, "to avoid disclosure of much broader categories of information."

The SEC also didn't fully explain why the current FOIA exemptions were inadequate to protect sensitive information provided by firms regulated by the agency, he said.

Issa introduced legislation last week, the SEC Freedom of Information Restoration Act.

In letters to the House Financial Services and Senate Banking committees on July 30, the SEC argued that regulated firms have refused to provide needed documentation to examiners over concerns that it would eventually be publicly disclosed.

The new law is "critical to our ability to develop a robust examination program that better protects investors," SEC Chairwoman Mary Shapiro wrote.

"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," she said.

Members of the Senate Judiciary Committee — Sens. Patrick Leahy (D-Vt.), John Cornyn (R-Texas), Ted KAUFMAN (D-Del.), and Chuck Grassley (R-Iowa) — introduced legislation and wrote a letter to Schapiro late last week saying they are concerned that "this provision could undermine the very important goal of bringing more transparency to Wall Street if improperly interpreted and implemented."

Several groups have called for a reexamination of the exemptions, including the Project on Government Oversight (POGO), which had a blog post Monday with the Issa letter.

"POGO and other good government groups are not convinced that the SEC needs any more authority to withhold information from the public," POGO said in the blog post. "We think that existing FOIA exemptions have stood the test of time in protecting against the release of sensitive or proprietary information. Furthermore, the SEC shouldn’t have to convince its regulated entities to cooperate, when it has the authority to issue subpoenas and impose penalties for non-compliance."

Other groups supporting the position include the American Library Association, the Government Accountability Project, OMB Watch, OpenTheGovernment.org and Public Citizen.

POGO wrote a letter Aug. 3 to Senate Banking Chairman Chris Dodd (D-Conn.) and House Financial Services Chairman Barney Frank (D-Mass.), stating that if the provision is "interpreted broadly, this provision has the potential to severely hinder the public's ability to access critical information related to the oversight activities of the Securities and Exchange Commission (SEC), thereby undermining the bill's overarching goals of more transparency and accountability."

Issa is asking Schapiro for a long list of documents he's expecting delivered by Aug. 19.

Those records include:

• All communications referring or relating to internal policies or guidance, effective between Jan. 1, 2005, and the present, governing the SEC’s treatment of FOIA requests.

• All records and communications referring or relating to Section 929I and every similar legislative proposal referred to in the SEC's July 30 letter.

• Documents that state the basis for the suggestion that FOIA’s examination exemption might cover some entities that the SEC regulates, but not others.

• Documents that describe every action taken by the SEC in response to a Sept. 25, 2009, Inspector General report.

• Documents that, in categorical terms, describe any information that was actually withheld from an SEC examiner under the circumstances described in the July 30 letter and was not covered by any FOIA exemption.

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