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Project on Government Oversight

Obama Signs SEC Secrecy Repeal into Law

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October 5, 2010

We just got word that President Obama has signed into law a bill to strike language from the financial reform legislation that had given the Securities and Exchange Commission (SEC) sweeping new powers to hide its records from public scrutiny.

As we stated when Congress passed the bill a few weeks ago, this is a huge victory for whistleblowers, defrauded investors, the media, and members of the public who want to hold the SEC accountable.

POGO led the charge to remove the secrecy provision from the Dodd-Frank Wall Street Reform and Consumer Protection Act. As soon as the secrecy measure was exposed, we organized a letter with some of our partner good government groups and called for its immediate repeal. And a few weeks ago, POGO’s Angela Canterbury testified before the House Financial Services Committee, calling on Congress to strike the secrecy language and to review the SEC’s overall record of withholding information from the public.

The bill signed into law today, S. 3717, repeals language from Section 929I of the Dodd-Frank bill. This broad and unnecessary language would have given the SEC the blanket authority to block the release of records in response to Freedom of Information Act (FOIA) requests, and to withhold records in response to subpoenas filed by third-party civil litigants, even if such records were needed to expose corruption or incompetence at the agency.

On one of his first days in office, President Obama issued guidance calling on federal agencies to operate with a presumption in favor of disclosure. By signing S. 3717 into law, the president has delivered a clear message that the SEC will not be allowed to hide its misconduct behind a cloak of secrecy.

Members of Congress from both sides of the aisle responded immediately once it became clear that Section 929I had gone too far in allowing the SEC to withhold information. Several bills were introduced in the House to repeal Section 929I, including bills introduced by House Oversight and Government Reform Committee Chairman Edolphus Towns, D-N.Y., and Ranking Member Darrell Issa, R-Calif., both of whom testified at the Financial Services Committee hearing a few weeks ago. On the Senate side, S. 3717 was introduced by Senators Patrick Leahy, D-Vt., Charles Grassley, R-Iowa, John Cornyn, R-Tex., and Ted Kaufman, D-Del., and passed both chambers with overwhelming bipartisan support.

For more background on the bipartisan effort to make the SEC more transparent and accountable, be sure to check out our previous press alerts and blog posts.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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