It was one of those tiny little sentences in a law the size of a telephone book that had huge implications. Section 929I of the new financial regulatory reform law allowed the SEC to withhold certain documents from Freedom of Information Act (FOIA) requesters and litigants in private civil lawsuits. Under the broad language of Section 929I the SEC was able to hide most records of how it performs (or didn't perform) one of its fundamental missions.
Thankfully, in one of the few acts of bipartisanship Washington has seen lately, lawmakers from both sides of the aisle got together to repeal this language. But the larger question remains: what is the SEC trying to hide? And, in the wake of the massive Ponzi schemes perpetrated by Bernie Madoff and R. Allen Stanford, why on earth would anyone think more secrecy is a good thing?
Earlier this month, SEC commissioner Mary Schapiro testified to Congress and offered some rather dubious claims as to why the provision was necessary. Yet, despite the stories, the agency was never able to provide any actual facts to support its fairy-tale.
Problems with transparency at the SEC are no aberration. Earlier this year, the SEC's inspector general actually issued a report condemning the agency's compliance with FOIA requests, and you've heard from us time and again about how the entire agency is in desperate need of reform.
President Obama will soon sign the law repealing Section 929I. This chapter will have a happy ending, but it appears the full story of secrecy at the SEC is still being written.
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