The American Securities Association, a trade association representing regional financial service firms, sued the SEC on June 6 over what they said is a violation of the Freedom of Information Act.
FOIA is a law that gives the public the right to request records from any federal agency, and agencies are typically required to comply with those requests, unless the information qualifies for an exemption, such as national security or personal privacy.
In a complaint filed in the U.S. District Court in Tampa, Fla., the American Securities Association said the SEC violated FOIA by not turning over records the trade association had requested.
Specifically, ASA filed FOIA requests for records related to settlements the SEC made with broker-dealers following investigations of their “off-channel” communications, such as text messages on personal devices, in 2020 and 2021.
The SEC refused to provide such records, pointing to an exemption that “exempts documents when disclosure could ‘reasonably be expected to interfere’ with ongoing or prospective ‘enforcement proceedings,’” according to the complaint.
“But the SEC concedes that ASA is seeking documents from settled proceedings,” the complaint said. “The SEC cannot withhold documents simply because it may bring different enforcement proceedings against other, unrelated entities. Such an outcome would license agencies to withhold documents in perpetuity.”
Furthermore, if the SEC could withhold the requested records on those grounds, “it has fallen woefully short of its high burden to justify the withholding,” according to the complaint.
“The purpose of the Freedom of Information Act is to ensure the public has access to information in the possession of federal agencies so the people can hold their government accountable,” ASA President and CEO Chris Iacovella said in a June 6 news release. “Unfortunately, the SEC has failed to comply with its FOIA obligations, and that is why ASA filed this lawsuit. The American public must have transparency into the SEC’s enforcement process.”
Represented by law firm Consovoy McCarthy, ASA requested that the court declare the records it requested must be disclosed, and that the court order the SEC to search for and produce such records.
