Congress has given final approval to legislation shutting down controversial Freedom of Information Act exemptions for the Securities and Exchange Commission, according to its sponsor, Sen. Patrick Leahy, D-Vt. The measure now goes to President Obama.
The exemptions, tucked into the financial services overhaul enacted in July, allowed the SEC to withhold some records gathered from hedge funds and other financial entities that it regulates. Without the new provisions, SEC Chairwoman Mary Schapiro argued, such entities could be reluctant to cooperate during examinations out of concern that sensitive records could become public.
But critics said existing FOIA exemptions were adequate for that purpose and questioned whether the SEC—whose reputation has been marred by its failure early on to catch Ponzi schemer Bernard Madoff and other lapses—would use the exemptions to shield itself from public scrutiny.
Schapiro denied that intent, but lawmakers were evidently not persuaded. The legislation passed the Senate and the House this week on voice votes.