August: SEC working in secrecy

2010 Columns


SEC, as it turns out, is not an acronym for Securities and Exchange Commission, it’s an abbreviation for SECRECY.

That’s the only conclusion we can draw after reading that the agency believes it no longer has to comply with the Freedom of Information Act under the new Wall Street reform signed into law last month by President Barack Obama.

The SEC rejected an information request from Fox Business News in late July saying that a provision of the reforms exempts it from disclosing documents related to its “surveillance, risk assessments, or other regulatory and oversight activities.”

Or other regulatory activities? That is a wide blanket, indeed – a blanket that covers the entire actions of the agency.

What is particularly incendiary about the agency’s stance is that President Barack Obama has insisted his administration would be one of openness – that “transparency and the rule of law would be the touchstones of this presidency.”

Pardon us, Mr. President, but your transparency is slipping.

According to news accounts, you said the Dodd-Frank reforms would ensure “accountability and responsibility.”

That position was echoed by SEC spokesman John Nester who said, “We are expanding our examination program’s surveillance and risk assessment efforts in order to provide more sophisticated and effective Wall Street oversight . . . Because registrants insist on confidential treatment of their documents, this new provision also removes an opportunity for brokers, investment advisers and other registrants to refuse to cooperate with our examination document requests.”

The SEC’s Faustian bargain in essence says, “Give us your information, we’ll go over it, and we’ll keep it all secret.” Certainly, not all the documents the SEC deals with or information involving ongoing investigations should be subject to release. But neither should there be an agency-wide exemption on the release of information to the public or the press – information that not only shines a light on the agency’s actions, but can also reveal its shortcomings. Not even the CIA has a such blanket exemption.

The SEC is telling the American public: Trust us, we’ll protect your interests.

The answer, unfortunately, is that we don’t.

Ask any of Bernie Madoff’s victims exactly how far their trust goes and how well they think the SEC did its job.

The Securities and Exchange Commission has forgotten who it works for.

It works for the public.

Congress – and that would start with U.S. Rep. Paul Ryan and Sens. Russ Feingold and Herb Kohl – should excise this aberrant and noxious amendment that shuts the public out of its own business and let’s the SEC operate in the dark.