Alert October 19, 2010

Congress Undoes Dodd-Frank SEC Confidentiality Provisions

On October 5, 2010, President Obama signed into law Senate Bill 3717 (“S. 3717”), which removed the heightened confidentiality provisions recently added to the federal securities laws by Section 929I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).  Section 929I exempted the SEC from being compelled to disclose records or other information obtained from its regulated entities in response to Freedom of Information Act (“FOIA”) requests and subpoenas served on the SEC if the information was produced to the SEC in connection with the SEC’s  “surveillance, risk assessments, or other regulatory and oversight activities” outlined in the Securities Exchange Act of 1934 (the “1934 Act”), the Investment Advisers Act of 1940 (the “Advisers Act”), and the Investment Company Act of 1940 (the “1940 Act”).  In the 1940 Act, these new provisions replaced the more modest protections of Section 31(c) which provided that the SEC, “shall not be compelled to disclose any internal compliance or audit records, or information contained therein, provided to the [SEC] under this section” by a registered investment company.  (No comparable provisions were displaced from the 1934 Act or Advisers Act by Section 929I.)

In repealing Section 929I, S. 3717 does not restore Section 31(c) of the 1940 Act; however, it does add language clarifying that FOIA Exemption 8 applies to the SEC.  Exemption 8 exempts from disclosure in response to FOIA requests, information “contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.”