SEC chief: Investigations outrank media

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- The chairman of the Securities and Exchange Commission says the ability to conduct confidential investigations into securities activity trumps the media's need to know.

In prepared testimony for a House hearing Thursday, SEC chief Mary Schapiro plans to defend a controversial measure limiting her agency's need to comply with Freedom of Information Act requirements that internal documents be available to requests from news organizations.

The Financial Services Committee is focusing on a provision of the Wall Street reform law recently signed by President Obama. That section provides certain protections to the SEC, shielding it from the Freedom of Information Act.

The section inspired not only the wrath of Fox Business, which first reported the new provision, but sparked the introduction of four different bills to repeal the measure.

The committee released Schapiro's prepared testimony on Wednesday, in which she lays out her defense for the provision, called Section 929I.

"Section 929I is central to our ability to develop a robust examination program that better protects investors," wrote Schapiro. "Though we recognize the competing policy interests it raises, a return to the pre-Section 929I status quo will perpetuate circumstances that have limited the efficacy of our examination program."

Schapiro also expresses her concern that if the bills pass and the provision is removed, it would undercut "the Commission's ability to obtain in a timely manner the sensitive or confidential information needed for comprehensive examinations."

Also on Wednesday, the SEC released guidance for the provision in an effort to dispel the suggestion of some critics that the section is a blanket exemption of the Freedom of Information Act.

In the guidance, the SEC insists that the section should only be invoked "in a manner that recognizes the importance of both open government and an effective examination process."

In letters to key committee chairmen in July, the SEC said the exemption was merely meant to apply to documents related to routine examinations, in which companies will often reveal "sensitive and proprietary information" including customer records, trading algorithms and company strategies.

Without the exemption, the SEC said many companies would refuse to cooperate with such examinations out of fear that their private information may be made public.

An earlier version of this story reported that a FOIA request filed by Fox Business was rejected by the new SEC provision, but an SEC spokesman denies that this happened. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,395.88 -28.97 -0.18%
Nasdaq 4,083.04 -3.19 -0.08%
S&P 500 1,859.77 -2.54 -0.14%
Treasuries 2.66 0.02 0.91%
Data as of 10:22am ET
Company Price Change % Change
Bank of America Corp... 15.97 -0.16 -0.99%
General Electric Co 26.52 0.40 1.54%
Facebook Inc 59.57 -0.15 -0.25%
Huntington Bancshare... 9.11 -0.20 -2.15%
Micron Technology In... 23.43 0.95 4.23%
Data as of 10:07am ET
Sponsors

Sections

The company continues to struggle with convincing marketers to pay as much for mobile ads as they do for desktop ads. More

Indian markets are riding high as investors bet that an election and new administration will cure some of the country's economic ills. More

The company continues to struggle with convincing marketers to pay as much for mobile ads as they do for desktop ads. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

Pamela Knighton, a 51-year-old social worker from Cuthbert, Ga. who earns less than $25,000 a year, had been really looking forward to her $4,300 tax refund last year. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.