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Hensarling rips SEC over confidential leaks

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) ripped the Securities and Exchange Commission (SEC) over its leaks on Wednesday, calling them “unacceptable.”

In a letter to SEC Chairwoman Mary Jo White, Hensarling demanded that the SEC provide his panel with its plans on implementing the recommendations from an inspector general (IG) report, which found that officials failed to guard market-sensitive information. [READ THE LETTER.]

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He also said he wanted to know if the agency would follow through with the IG’s recommendations for disciplinary actions against some employees.

“The intentional and unilateral decision made by an individual at the SEC's headquarters to leak a Commissioner's comments during a confidential and closed SEC meeting will chill the SEC’s ability to effectively enforce the Federal securities laws,” Hensarling wrote.

The IG report focused on a September 2013 leak to Reuters involving the results of a nonpublic vote regarding J.P. Morgan's $200 million settlement with the SEC. It did not reach a conclusion on who was responsible for that lead.

The IG report found problems with the way the SEC handles its meetings.

It said officials failed to clear the room during nonpublic, executive session votes of the five-member board and that officials didn't keep thorough attendance records of the meetings.

“Attendance at closed Commission meetings should be a privilege, not a right,” Hensarling wrote. “SEC employees who have not played a meaningful and substantial role in the enforcement matter pending before the Commission should not be attending a closed meeting.”

Even when the room is cleared, it's still possible to hear information by listening in the hallway, according to the report.

“Please describe ... the Commission's plans to soundproof the room in which closed meetings occur or post security outside of the room to prevent unauthorized SEC employees and other individuals from listening to proceedings,” Hensarling wrote, noting that he wants a response by Sept. 5.

Hensarling questioned how The Hill and other media were able to get the IG report, which has not been officially released.

“Furthermore, both CNBC and The Hill obtained the OIG's [Office of Inspector General] nonpublic and investigative report, which details [the IG's] efforts to identify the leaker(s),” Hensarling wrote. “Leaks of this magnitude are unacceptable.”