Dustan Prial at Fox News:
So much for transparency.
Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act.
The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from “surveillance, risk assessments, or other regulatory and oversight activities.” Given that the SEC is a regulatory body, the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot.
That argument comes despite the President saying that one of the cornerstones of the sweeping new legislation was more transparent financial markets. Indeed, in touting the new law, Obama specifically said it would “increase transparency in financial dealings.”
The SEC cited the new law Tuesday in a FOIA action brought by FOX Business Network. Steven Mintz, founding partner of law firm Mintz & Gold LLC in New York, lamented what he described as “the backroom deal that was cut between Congress and the SEC to keep the SEC’s failures secret. The only losers here are the American public.”
My column today puts the DISCLOSE debacle in the broader context of the Democrats’ reign of darkness. Underscoring the theme of theme of the column: The story from Fox Business on how the “financial reform” bill championed by Obama exempts the SEC from FOIA requests. The transparency farce continues.
Meredith Jessup at Townhall
Tiernan Ray at Barron’s:
Prial reports he hasn’t gotten any response to his request for comment on the matter from the SEC.
The article includes a document link from Scribd with text of the new law, HR 4173, Section 929I, in which it states the SEC Act of 1934 is amended to state the SEC is “not compelled to disclose records or information obtained [...] including surveillance, risk assessments, or other regulatory and oversight activities.”
The lawyer for Fox, Steven Mintz, with Mintz & Gold LLC in New York, says the network plans to challenge the SEC on its interpretation of the law.
Does this mean the SEC has just brazenly stepped outside Freedom of Information Act rules? I’m not sure. I plan to inquire with the SEC on its side of the story and will let you know what, if anything I find.
Note: Fox Business, of course, is a part of News Corp., also the publisher of Barron’s and of this blog.
Correction: As a few readers noted, the wrong section number was listed above for the relevant passage in HR 4173. It is Section 929I, as in Internet, not a numeral “1″ on the end. You can see the passage in the Library of Congress posting of the final version of the bill. My apologies for any confusion caused by the error.
The Dodd-Frank bill had a lot of bad ideas rolled into it, but this may be the worst. As Mintz notes, the next time a Bernie Madoff-type scam occurs, the American public won’t have any idea about it, or about the SEC’s efforts to prevent it. The use of FOIA has uncovered many problems at the SEC, which is undoubtedly why Chris Dodd and Barney Frank wanted the exemption. Among the cases listed by Fox Business as having been boosted by FOIA requests are:
- March 2009 – Fox used FOIA to discover that the SEC had investigated Madoff and R. Allen Stanford, but failed to follow through on prosecution in time to save investors.
- 2009 – Fox again used FOIA to get records showing that the Fed knew AIG execs would get their bonuses under the bailout legislation proposed by Congress.
- SEC whistleblower Gary Aguirre forced the SEC to release documents through FOIA requests that showed he was correct in accusing the agency of interfering in an investigation of Pequot Asset Management — and allowed him to get a settlement for wrongful termination.
None of these would have happened without FOIA. Government has only one purpose in issuing FOIA exemptions — opacity. Some functions in government require secrecy, but those should be limited to acute national security operations and other such public-safety tasks (such as raw FBI files, for instance).
Barack Obama and the Democrats don’t want people to see how the SEC does its work, and that should worry everyone who has watched the SEC blow its regulatory responsibilities over the last few years. This is an agency that needs more oversight, not less, especially with its increased power and authority.
Daniel Foster at The Corner:
“No one will know until this is actually in place how it works.” With each passing day, Senator Dodd’s appraisal of the Democrats’ Fin-Reg bill get truer and truer.
Who wins when it comes to this misguided legislative POS? Lawyers.