The Senate Judiciary Committee Thursday unanimously approved bipartisan legislation to repeal exemptions to the Freedom of Information Act (FOIA) for the Securities and Exchange Commission (SEC) that were enacted as part of the Wall Street reform bill, which was signed into law in July. The legislation is sponsored by Committee Chairman Patrick Leahy (D-Vt.), and Committee members Chuck Grassley (R-Iowa), John Cornyn (R-Texas), and Ted Kaufman (D-Del.).
The legislation will eliminate several FOIA exemptions for certain records provided to the SEC. The exemptions were included in the Wall Street Reform and Consumer Protection Act.
"I am concerned that the FOIA exemptions in Section 929I of the historic Wall Street reform law could be interpreted and implemented in a way that undermines the important goal of restoring transparency and accountability in our financial system," said Leahy. "Congress should take immediate steps to clarify this matter and eliminate overly broad FOIA exemptions. The Senate should pass this important legislation without delay."
"The economic crisis and wave of financial frauds we have seen over the past few years necessitate more transparency, not less, at the SEC," said Cornyn. "The special SEC exemptions tucked into the massive Dodd-Frank bill earlier this year could allow the SEC to deny citizens access to almost all agency records. The SEC does not have the best track record when it comes to FOIA requests, and should play by the same rules of transparency as every other government agency."
"As I said back in July, any exemptions to the Freedom of Information Act, which empowers citizens to monitor their government, must be fashioned with a scalpel," said Kaufman. "The Dodd-Frank law unfortunately contains overbroad SEC exemptions to FOIA. The bill voted out of the Judiciary Committee today eliminates the exemptions while carefully addressing legitimate SEC concerns. Its passage is critical to restoring transparency and promoting effective oversight of our financial markets and regulatory agencies."
"The blanket FOIA exemption for the SEC that was contained in the Wall Street Reform bill was dramatically overbroad and was drafted in a way that evaded full and fair consideration by this Committee. It was particularly troubling given the SEC's terrible record on complying with FOIA and the clear intent of Congress on this issue," Grassley said. "Our bill is a much needed piece of legislation to correct this problem. It does so in the spirit of open government, while protecting information Congress has previously exempted from disclosure."
The legislation approved by the Judiciary Committee also clarifies that hedge funds and other new entities that the SEC will regulate under the Wall Street reform law will be considered "financial institutions" for the purposes of applying FOIA Exemption 8. The bill will ensure that the SEC can treat sensitive information provided by hedge funds to the Commission in connection with the SEC's examination and surveillance activities in the same manner as the Commission treats such information when it is provided by other financial institutions.
The legislation will now be referred to the full Senate for consideration.