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Securities and Exchange Commission Gets More Secretive Under FinReg

August 4, 2010 - by Donny Shaw

This probably won’t come as a surprise to many of you, but in the 383,013-word, 2,253-page Dodd-Frank financial reform bill, Congress and the President seems to have enacted a provision that, according to a cadre of government transparency groups, “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.”

The offending language is in Sec. 929I of the final bill, which is titled, “Protecting confidentiality of materials submitted to the Commission.” You can read the legislative text of that section for yourself at this link, or check out Sunlight Foundation policy counsel Daniel Schuman’s excellent explanation of the section here.

The condensed summary is that the provision allows the Securities and Exchange Commission to deny FOIA requests and court subpoenas (except for those coming from the federal government) for information that they say “[relates] to an examination, surveillance, or risk assessment” of entities under their jurisdiction. The new law is only two weeks old and the SEC has already used their new power to deny information requests. They cited the provision last week when denying a FOIA request from Fox News re: their handling of the Madoff case.

Government transparency groups are asking banking chairmen Chris Dodd [D, CT] and Barney Frank [D, MA-4] to remove or amend the language, and two bills have already been introduced to do so — Rep. Ron Paul’s [R, TX-14] H.R.5970 and Rep. Darrell Issa’s [R, CA-49] H.R.6038. Add those to your MyOpenCongress page of tracked items to get alerts as soon as either of them see any action.

If you’re like me, you’re probably curious where this anti-transparency provision came from. The answer: the Securities and Exchange Commission asked Chris Dodd and Barney Frank to include it in the financial reform bill and they complied.

Both the original Senate version introduced in April 2010 (S.3217) and the original House version introduced in December 2009 (H.R.4173) contained versions of the language. In the Senate version, the disclosure exemption was included in Sec. 404(8), and in the House version it’s in Sec. 7409. The exact wording of the provisions differ, but, for all intents and purposes, they do the same thing.

SEC Chairman Mary Schapiro gives a little more background in a letter to House Financial Services Chairman Rep. Barney Frank [D, MA-4] that was designed to alleviate concerns about the provision:

The need for Section 9291 is not new, nor is the general language that it contains. As far back as 2006, then SEC Chairman Chris Cox sought language similar to what is contained in Section 9291. On September 11, 2008, the House ofRepresentatives passed H.R. 6513, the Securities Act of 2008, by voice vote with bipartisan support. Section 15 of H.R. 6513 contains language similar to Section 9291. In July 2009, I provided you and other Congressional members with legislative proposals that Commission staff believed would allow the Commission to better protect investors. Contained in those proposals was language similar to Section 9291 regarding the protection of certain information provided to the Commission.

Daniel Schuman comes to what I think is the right conclusion here:

Based on the Commissioner’s letter, these provisions have shown up in legislation before — thus demonstrating how omnibus legislation allows a pre-existing laundry list to be enacted into law.

This also shows how difficult it can be to figure out what’s going on. With the move into the regulatory implementation phrase — and a request for public comments on the implementation of these regulations already issued by the SEC — it is likely that those who are in the know will work very hard to keep the rest of us from figuring out what’s going on … until it’s too late.

SEC Chairman Mary Schapiro is pictured above.

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ExGOP 08/04/2010 4:28pm

Here’s today’s interview with Senator Stabenow (MI-D) on the Ed Show.

beenblue 08/04/2010 3:41pm

Tier 5 GOOD,JOBS BETTER. Were begging for scraps, and I`m tired of being afraid in the “LAND OF THE FREE, AND THE HOME OF THE BRAVE.” I might be over the top with this, but I feel that company`s that left our country so as to increase their profits in another with slave labor,and massive tax breaks, are in my opinion ANTI-AMERICAN and should be boycotted by the people of THIS country immediately!!! NO MORE OUTSOURCING, we need to stop the insanity of letting corporate America, and foreign corporations suck the life out of the nostrils of middle America. I feel that anyone, or any party who does not share in the recovery of this Nation with immediate action, only shows themselves to be enemy`s of the state, and all their rehearsed rhetoric and sophistry is just an admission of guilt.“UNITED WE STAND OR DIVIDED WE FALL”

beenblue 08/04/2010 2:02pm

Fox news turned down by (SEC)!, excuse me while I light up a smoke, and enjoy this moment…WOW what a wake up call. Actually it`s a wake up call to all the people of this Nation about accountability and the need to have regulations, and oversight in Washington, and Wall Street no more LAISSEZ FAIRE in this country!!! The Government`s job is to govern openly insuring justice, and equality for all, not just the ones who can afford to buy it. THE BUSH YEARS ARE OVER, so out with the Overlords of Globalization,and outsourcing our jobs, while they create ideological enemy`s at the gates, and rob us of our fate and enslave us in the process.

Abaratarrr 08/04/2010 1:57pm

The Americans Want to Work Act (S.3706)

Tier 5 – Unemployment Insurance

  • What it Does: Provides 20 weeks of additional unemployment insurance for states with 7.5% or higher unemployment. This tier will benefit the people who have exhausted all of their benefits.
  • Retroactive Eligibility: Would apply retroactively to everyone who has exhausted all of their previous tiers in recent months. However, benefits would not be paid retroactively. (Example – If you exhausted your benefits 3 months ago, you would be eligible to begin your Tier 5 at the date of enactment. You would not, however, be paid out for the 3 months in which you did not receive benefits. If you are going to exhaust your benefits in 2 weeks, you will move right onto Tier 5 and receive your 20 weeks).
  • Requirements: People who are unemployed still need to meet current UI law requirements such as job searches.

Abaratarrr 08/04/2010 1:50pm

ExGOP 08/04/2010 1:10pm

BREAKING NEWS (MSNBC) – Senator Stabenow introduces a bill for the 99ers “The Americans Want to Work Act”. She say’s to contact our local reps to request that they support this bill!

Thank you Senator for stepping up for the 99ers!

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