Apparently fed up with all those stories about how its employees watched pornography instead of catching Bernie Madoff, the S.EC. will no longer respond to Freedom of Information Act requests. In fact, thanks to a portion of the recently passed Dodd-Frank financial reform bill, the S.E.C. may now be subject to very little public oversight at all.
The law apparently exempts the agency from disclosing any “surveillance, risk assessments, or other regulatory and oversight activities,” which is pretty much all they do. So Congress and other government organizations may look into the commission’s business, but the public may not. In its report on the subject, FoxBusiness used a lawyer it employs to explain why this is bad, but S.E.C. spokesman John Nester spun the exemption as a boon for whistleblowers:
We are expanding our examination program’s surveillance and risk assessment efforts in order to provide more sophisticated and effective Wall Street oversight. The success of these efforts depends on our ability to obtain documents and other information from brokers, investment advisers and other registrants… Because registrants insist on confidential treatment of their documents, this new provision also removes an opportunity for brokers, investment advisersand other registrants to refuse to cooperate with our examination document requests.
This means the commission will either become a super-efficient intelligence gathering organization, or will continue business as usual with no one looking over its shoulder. At any rate, at least they got the biggest firm in the world to smilingly admit they made “a mistake.”