The SEC's response to the uproar over this provision has been both anemic and incomplete - arguing that they didn't really need what they supposedly really needed. According to a recent FOX Business report, an SEC spokesman explained that the provision was tied to the SEC's expanded examination program, and the new provision simply “makes certain that we can obtain documents from registrants for risk assessment and surveillance under similar conditions that already exists by law.” Of course, prohibiting the SEC from using its regulatory authority to comb through a company's records to turn around and disgorge them out of context to the public is hardly outrageous. But the SEC seems unable to provide any justification for the the true source of the uproar; the final clause of the new provision: “or other regulatory...activities.” The final clause has nothing to do with confidential records gathered during examinations of industry participants. And yet it would provide the SEC ample justification to ramp up its FOIA swat-down rate from 85% to 100%.
The SEC receives and generates a lot of information outside of its exam function as a part of its “regulatory oversight activities.” Perhaps new legislation can be drafted to protect a legitimate interest in protecting the industry's confidential information without completely emasculating the right to access provided by the FOIA.