Yesterday, President Obama signed into law the repeal of Section 929I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which, for a short time, granted the SEC a broad exemption from having to disclose information obtained in SEC examinations under the Freedom of Information Act (FOIA) and in response to subpoenas in private litigation. As suggested in a House Financial Services Committee hearing last month, the repeal is intended to reign in the breadth of the SEC’s discretion and provide greater transparency in the SEC’s regulatory process. The SEC published guidance on September 15 limiting the application of Section 929I, but the SEC's commitment to exercise self-restraint did not alleviate lawmakers’ concerns.
Although the repealing legislation revoked the SEC’s short-lived authority to resist subpoenas in private litigation, it did resolve one of the SEC’s concerns. In supporting the enactment of Section 929I, the SEC argued that the FOIA exemptions which apply only to financial institutions could not be predictably applied because neither the statute nor the legislative history defined the term “financial institution.” The repealing legislation resolved this ambiguity by providing that “any entity” for which the SEC is responsible for “regulating, supervising, or examining” is deemed to be a “financial institution.”