Steven Mintz, the outside counsel for Fox Business Network, is speaking Thursday to the Committee on Financial Services in the House of Representatives about the Freedom of Information exemption that was inserted into the financial regulation law that was enacted earlier this year.
Fox Business Network is upset that the exemption is being used by the Securities and Exchange Commission to deny it documents. The exemption has also been drawn a strong statement from the Society of American Business Editors and Writers.
In his prepared testimony, Mintz stated, “Because of its extremely broad language, the SEC is entitled to refuse disclosure of any document or record as long as it can say that the document or record was obtained through – or even based on or derived from – the exercise of the agency’s surveillance, risk assessment or examination duties. Further, the new provision gives the agency absolute and unreviewable authority to demand and collect information from third parties, such as broker/dealers and hedge funds, without prior review from the Office of Management and Budget.”
Later, he noted, “While Chairman Schapiro has taken the position in her July 30 letter to the Committee that the new FOIA exemption is required to safeguard the confidential proprietary information and trade secrets of business submitters, such as trading algorithms, trading strategy information, portfolio managers’ trading reports and so on, such material has always been protected from disclosure under FOIA Exemption 4, which governs trade secrets and confidential commercial information.”
Mintz also stated, “Notwithstanding the agency’s effort to portray section 929I as something less than a ‘blanket’ exemption for SEC documents, a straightforward reading of the provision demonstrates that it actually encompasses virtually everything the agency does in connection with its core surveillance and examination functions.”
He concluded: “The SEC’s track record in implementing FOIA suggests that the agency cannot be trusted to formulate guidelines that are sufficiently protective of the public’s right of access. My own recent experience in litigating FOIA claims has been that, of the three federal agencies that have played the biggest role in the recent financial crisis (the Treasury Department, the Board of Governors of the Federal Reserve and the SEC), the SEC is – by far – the most reluctant to comply with even the most basic obligations imposed by FOIA, including the obligation to conduct a reasonably adequate search for responsive documents.”
Read the full testimony here.