Four prominent members of the U.S. Senate introduced a bill Thursday that would strike the provision in the Dodd-Frank Act that potentially gives the Securities and Exchange Commission broad powers to deny Freedom of Information Act requests.
The bill introduced by a bipartisan group of Senators on the Senate Judiciary Committee - Sen. Patrick Leahy, D-Vt., Sen. John Cornyn, R-Texas, Sen. Ted Kaufman, D-Del. and Sen. Chuck Grassley, R-Iowa - is similar to a House version introduced by Rep. Darrell Issa, R-Calif., that would strike the provision in the law.
The drafting of a Senate bill to strike the SEC FOIA provision comes a day after House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., said he would hold hearings next month regarding potential abuse of the bill.
"When Congress enacted these exemptions, it sought to ensure that the SEC had access to the information that the Commission needed to carry out its new enforcement powers and to protect American investors – not to shield information from the public,” Leahy said, who is also the chairman of Senate Judiciary Committee.
“I have been troubled by the sweeping interpretation that the Commission has expressed, to date, that these exemptions would shield all information provided to the Commission in connection with its broad examination and surveillance activities."
The SEC provision in the Dodd-Frank Act, known by its technical name 929I, was invoked by the SEC to deny an FOIA request by FOX Business last week. Since the news became public, several members of Congress have come out against the provision, saying it gives the SEC too much statutory power to deny FOIA requests.
"If anything, the financial crisis and the wave of financial frauds we have seen over the past few years call for more transparency at the SEC, not less,” Cornyn said in a statement.“I am alarmed that the financial regulatory reform bill appears to have excluded the SEC from the FOIA disclosure requirements."
Journalism organizations have also come out publicly against the bill, citing the SEC’s failures with the Bernie Madoff case and subprime mortgage crisis as reasons why the agency needs to be opened up to further public scrutiny.
The SEC has repeatedly denied that the 929I provision can be used to deny FOIA requests, saying that it will continue to honor them.