President Obama Oct. 4 signed legislation to repeal a controversial exemption to the Freedom of Information Act that was tucked in a major financial reform law passed recently.
Critics objected to Section 929I of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which said the Securities and Exchange Commission would not be compelled to disclose certain registrant’s records that it obtained while performing its surveillance, risk assessments, regulatory or other oversight duties. They argued that that the exemption was too broad.
The SEC chairwoman, however, said removing the exemption would undermine her agency’s ability to efficiently conduct examinations of registered entities and that the agency will have to resort to subpoenas to get information.
Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), one of the bill’s sponsors, said the new law “will ensure that… [FOIA]… remains an effective tool to provide public access to information about the stability of our financial markets.”
The legislation (S. 3717) would clarify that new entities regulated by the SEC under the reform act, including hedge funds, will be considered “financial institutions” under FOIA Exemption 8.
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