One of the more controversial provisions of the Dodd-Frank Act allows information gathered by the SEC in its examination and investigation of those entities it regulates to not be subject to disclosure under the Freedom of Information Act. It also appears to be the first piece of the Dodd-Frank Act to be headed into the dustbin of history.

In general, unless an express exemption from FOIA’s disclosure obligations exists, information in possession of the SEC is available to the public upon request. However, Section 929I of the Dodd-Frank Act provides that records obtained from those companies it regulates as part of its “surveillance, risk assessments, or other regulatory and oversight activities” can be kept confidential. However, both the House and Senate have now passed bills removing the exemption provided to the SEC under the Dodd-Frank Act and it appears that President Obama will soon sign the bills into law. If that occurs, this amendment will represent significant pushback on the position of SEC Chairman Mary Schapiro, who on September 16, 2010 testified before the United States House of Representatives Committee on Financial Services that “Section 929I is central to our ability to develop a robust examination program that better protects investors.” This is further evidence that while the SEC and Congress can have the same goal – investor protection – they often diverge on the best way to achieve it. More divergence on Dodd-Frank issues is likely on the way in the weeks and months ahead.