The scope of three federal Freedom of Information Act exemptions contained within a section of recently passed financial reform legislation is continuing to provoke debate among the Securities and Exchange Commission, members of Congress and the media about just how far the exemptions reach in shielding SEC-held documents from the public.
The Reporters Committee for Freedom of the Press reported on the controversy surrounding section 929I of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the claim it potentially exempt the SEC from any FOIA obligations last Thursday.
SEC Chairman Mary L. Schapiro refuted the charge that the law is overly broad in separate July 30 letters to Rep. Barney Frank, D-Mass., and Sen. Chris Dodd, D-Conn. "This provision does not provide 'blanket' SEC exemption from FOIA and is not designed to protect the SEC as an agency from public oversight and accountability," Schapiro wrote to the two lawmakers.
According to Schapiro, existing FOIA exemptions were not adequate to assure businesses that proprietary information gathered during the course of an SEC investigation would remain confidential and the addition of this provision was intended to hasten cooperation. "It is important that registered entities be able to provide us with access to confidential information without concern that the information will later be made public," Schapiro wrote.
Frank told POLITICO on Monday that he was surprised by the negative attention the provision is receiving, saying that it was intended to exempt a narrow class of documents gathered during SEC investigations and that no objections were raised at the time the provisions were introduced. POLITICO also reported that Dodd intends to monitor the SEC's compliance with FOIA to ensure the agency does not overstep its bounds.
Others in Congress, however, are not taking a wait-and-see approach. In separate statements, Democratic Sens. Patrick Leahy of Vermont and Ted Kaufman of Delaware have expressed concerns about the scope of section 929I and are calling for a "do-over." Republican Reps. Ron Paul of Texas and Darrell Issa of California have each offered bills that would either narrow or wholly repeal the controversial language.
Though the scope of the provision, if left intact, would depend largely on how the Obama administration chooses to interpret it, some argue that the law does not appear to be in line with the administration's professed commitment to transparency.
"This gives the SEC a safety net that is all-encompassing. Essentially this is a net that the SEC is fishing for tuna and they may catch dolphins at the same time. Is that a good thing?," attorney Mark Zaid told the Wall Street Journal.