Congress repeals SEC exemption from FOIA

Lawmakers moved Thursday to overturn part of the recent financial overhaul that gave the Securities and Exchange Commission (SEC) greater power to deny freedom of information requests from the public.

The House approved legislation on Thursday that would rein in the SEC's power to withhold information it gathers during examinations of private firms. The Senate this week unanimously approved the same bill, which now heads to the president for enactment.

SEC Chairwoman Mary Schapiro and her predecessor, Chris Cox, pushed hard for the power, arguing that it would help enforcement cases by protecting proprietary information that businesses turn over during investigations.

The exemption garnered little attention during congressional debate on the financial overhaul. After the SEC cited the exemption in a denial of a request from Fox Business Network, Democrats and Republicans quickly moved to rewrite the legislation.

"A consensus developed that this was an exemption that was far too broad," House Financial Services Committee Chairman Barney Frank (D-Mass.) said Thursday. The legislation was pushed by Sens. Pat Leahy (D-Vt.), Ted Kaufman (D-Del.) Charles Grassley (R-Iowa) and John Cornyn (R-Texas).

Frank and Reps. Darrell Issa (R-Calif.), Spencer Bachus (R-Ala.) and Ed Towns (D-N.Y.) worked to rewrite the provision in the House.

Towns said the SEC measure is a "secrecy provision" that undermines the intent of the financial overhaul package.

Consumer advocacy groups, such as the Project on Government Oversight (POGO), also urged lawmakers to repeal the provision.

“This is a big win for open government and accountability. It is especially a victory for defrauded investors, the media, and whistleblowers," said Danielle Brian, executive director of POGO, in a statement.