New Wall Street rules pit SEC vs. the media

NEW YORK (CNNMoney.com) -- One of Wall Street reform's littlest known provisions is getting big attention for giving a government agency a possible loophole for avoiding journalists' requests for information.

Fox Business Network has been arguing in court with the Securities and Exchange Commission since March 2009 about gaining access to internal government documents that could shine some light on the way the agency investigated the Bernie Madoff and R. Allen Stanford Ponzi schemes.

But on Tuesday the Securities and Exchange Commission tried to shoot down some of those requests once again, according to the cable network.

The SEC's reason this time? Section 929I of the new Wall Street reform signed into law by President Obama last week exempts the SEC from disclosing documents related to its "surveillance, risk assessments, or other regulatory and oversight activities."

This new legalese has journalism industry groups up in arms about public information laws and the media's assumed role as an additional check and balance on government. The law's broad wording has some journalists wondering if the agency can interpret the law to block all requests for information.

"The folks up on the Hill don't know what they did. Shutting down all of this information probably wasn't the intent of Congress," said Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press.

Media outlets will often submit requests under the Freedom of Information Act to obtain official documents from federal agencies, usually in an effort to shine light on the inner workings of the government, and in some cases, expose its shortcomings.

Some private information is already exempt from FOIA though, including secret documents about national defense or foreign policy, and "trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential." Information used in investigations is also exempt, often until six months after the investigations are complete.

That said, it's unlikely that lawmakers meant for the new provision to give the SEC an excuse from disclosing any and all of its records, said Kevin Goldberg, who serves as legal counsel to the American Society of News Editors.

"It really is intended to apply more to ongoing investigations where the SEC is trying to obtain information and wouldn't otherwise be able to obtain that information to conduct its investigation," he said. "It's not intended to apply to everything the SEC does."

"Not even the CIA has full exemption from FOIA," he added.

The SEC claims the Wall Street reform wording is nothing new, but rather, clarifies existing law that protects the agency from releasing a company's confidential information obtained in routine and at random audits. That confidential treatment helps the agency get companies to cooperate with regular compliance examinations, it said.

"The new provision applies to information obtained through examinations or derived from that information," SEC spokesman John Nester said in a statement.

"The new legislation makes certain that we can obtain documents from registrants for risk assessment and surveillance under similar conditions that already exist by law for our examinations," he added.

Fox Business said it plans to challenge the SEC's interpretation of the law in court.