Report criticizes SEC's compliance with FOIA

The Securities and Exchange Commission’s Office of Inspector General released a report on Friday that sharply criticized the agency’s compliance with the Freedom of Information Act.

The report, released just two years after an audit prompted reorganization of the commission’s FOIA processing system, shows an agency still struggling to meet public access demands and recommends that it restructure its FOIA leadership, improve its processing mechanisms and create a more adequate appeals system.

A main criticism in the report was that the SEC grants such a small percentage of records requests and fills them at a slow rate. While most federal agencies reported they fully granted 41.8 percent and partially granted 18.7 of requests, in fiscal year 2008 the SEC only granted 10.5 percent and 2.9 percent respectively. More than half the time, the SEC’s response to a request was "no information found" and it denied 3.9 percent of requests entirely. On average, other agencies found no information for only 13 percent of requests and denied 4 percent outright.

When it provides records, the SEC grants requests at a rate "significantly slower" than "all federal agencies" and its median response time was triple the federally allowed 20 days, the report found. Last year the SEC processed 15,463 FOIA requests and the median response time was 66 days. The median response time for complex requests was 570 days.

Furthermore, the report found, the SEC’s FOIA staff members were not aware of the commission’s processing policy and procedures, lacked formal training, did not understand the legal exemptions and did not believe FOIA was a commission priority.

The report criticized the commission’s overall lack of FOIA focus and leadership and said it did not make complying with FOIA a priority, with one of the SEC’s 40 public access liaisons saying "FOIA is the step-child" of the agency.

The problems begin at the top and filter down, according to the report. The job description of the commission’s chief FOIA officer did not meet the legal requirements under both Executive Order 13392 and the FOIA reforms in the OPEN Government Act of 2007, which require a more senior official than the one currently in place at the SEC. The executive order specifically required the appointment of an official at the “Assistant Secretary or equivalent level.”

While the inspector general’s office was conducting its review, SEC officials realized the lack of compliance, created a full-time senior staff position and accepted applications in July. But officials had not filled the post by the report’s release date.

Finally, the report found complaints of bias and problems in the SEC’s FOIA appeals process. The inspector general identified complaints of discrimination against commercial requesters, who make up more than 90 percent of annual requests; confusion about redaction; mismanagement of sensitive information; and a lack of power separation in the SEC’s FOIA appeal process “that compromises a fair and unbiased review.”

The report recommended that the office of general counsel create and enforce a clearer separation of roles and that the new chief FOIA officer ensure staff and liaisons have access to legal advice.

Among the report’s many recommendations, the inspector general did note that the SEC has improved its customer service and reduced its overall backlog of FOIA requests since 2007.