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Financial reform bill has FIOA loophole for SEC

“The Society of American Business Editors and Writers is appalled at a little-noticed provision of the new financial reform legislation that allows the Securities and Exchange Commission to ignore legitimate requests for information made by the public or the press,” the SABEW’s president, Rob Reuteman, said in a statement Wednesday.

“The Freedom of Information Act, which became law in 1967, has been of immeasurable aid to public understanding of government operations – and sometimes its misdeeds. Often, through the workings of a free press, government agencies have been forced to comply with public information requests even if the information released places those same agencies in a bad light. The public has been served by such practices.

“For instance, we now know that the SEC itself botched investigations of Bernie Madoff, who fleeced investors of tens of billions of dollars and now sits in prison. The SEC has been forced to institute internal reforms as a result of its own investigative shortcomings that came to light. Hopefully the SEC is better able to protect the public from financial crooks as a result.

“But under the provisions in this new law, the SEC no longer has to comply with such requests for information. They claim it will better allow them to obtain the documents they need to prosecute criminals, that such documents will be withheld from them if there is a chance they will see the light of day.

“Don’t fall for that line of reasoning. Government agencies have always been able to censor the documents they are forced to release, in order to withhold such sensitive information. Journalists have been able to construct important stories from heavily redacted government documents for decades.

“But allowing a government agency to ignore such requests for information, as this provision does, appears to roll back 43 years of transparency in government under the Freedom of Information Act. SABEW finds it particularly distressing that this new cloak of secrecy comes in spite of President Obama’s declaration that the new law will ‘increase transparency in financial dealings.’ “

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