Thursday, September 16, 2010
Mary Schapiro Playing Hide and Seek on disclosure
By Rachelle Younglai
(Reuters) - U.S. regulator Mary Schapiro sought to assure lawmakers on Thursday that the Securities and Exchange Commission would remain accountable to the public amid charges it was using a new law to hide information.
Under the recently passed Wall Street reform bill, the SEC does not have to disclose the results of examinations of specific firms.
That has rankled news organizations and government accountability advocates, who are concerned that the SEC will be exempt from most requests for information from the public, including those under the Freedom of Information Act, or FOIA.
SEC Chairman Schapiro told a congressional hearing on Thursday that this was not the case and said her staff would not be able to deny requests for information if the SEC or the U.S. government was a party.
Schapiro issued guidance to her staff, giving them limited use of the new provision. Under the guidance, the SEC will still produce documents where the person requesting the information has "demonstrated a substantial need for them that outweighs the confidentiality interest of the examined entity."
At a House Financial Services Committee hearing, lawmakers questioned whether the new law had to be adjusted. Four lawmakers have introduced legislation to repeal the provision.
One of those lawmakers, Republican Rep. Darrell Issa, said: "every bureaucrat, no matter how well-intended, always wants to err on the side of caution and less while the public believes they should err on the side of more."
Schapiro defended the spirit of the provision, which was also a measure sought by former SEC Chairman Christopher Cox and approved by the House of Representatives in 2008.
The provision was "designed to eliminate a substantial and longstanding impediment to our examiners' ability to obtain vital examination information on a timely basis," Schapiro told the hearing.
She said that it gave market players clarity that the SEC could protect their confidential and proprietary information.
"Some regulated entities have in the past expressed concern about the level of protection available to examination materials provided to the commission," she said.
The Freedom of Information Act requires federal agencies to disclose certain information in response to a written request. Under the act individuals can request nonpublic consumer complaints, staff comment letters and information compiled during the course of investigations from a federal agency.