As written, the law exempts the SEC from disclosing records or information derived from "surveillance, risk assessments, or other regulatory and oversight activities."
In letters to the House Financial Services and Senate Banking committees on July 30, the SEC argued that regulated firms would refuse to provide needed documentation to examiners over concerns that it would eventually be publicly disclosed.
The new law is "critical to our ability to develop a robust examination program that better protects investors," Shapiro wrote.
"This provision does not provide a "blanket" SEC exemption from FOIA and is not designed to protect the SEC as an agency from public oversight and accountability," she said.
Still, lawmakers began expressing concern last week that the measure would provide too much protection from the FOIA and wouldn't allow for needed transparency.
"By exempting the SEC from Freedom of Information Act requirements, the new law lets Wall Street and the SEC continue to avoid scrutiny and accountability,” Grassley said. "Our legislation will help plug this glaring hole in the new financial regulation law."
The law was meant to ensure that the SEC has access to the information it needs to carry out its new enforcement powers, "not to shield information from the public,” Leahy said in a release. “I have been troubled by the sweeping interpretation that the commission has expressed, to date, that these exemptions would shield all information provided to the commission in connection with its broad examination and surveillance activities."
Cornyn said the "SEC should play by the same rules of transparency as every other government agency."