WASHINGTON — A bipartisan group of senators has introduced legislation to make regulation of financial companies more transparent — and to close a major loophole in the sweeping financial overhaul enacted last month.
The bill would reverse language in the overhaul law that allows the Securities and Exchange Commission to reject many open-records requests. The SEC would not have to disclose any records related to its policing investigations of companies such as hedge funds and computer trading platforms.
A provision in the new Dodd-Frank Wall Street Reform and Consumer Protection Act, which is now law, has raised eyebrows among some First Amendment and freedom-of-information advocates.
The federal Freedom of Information Act requires that government records be released to anyone who asks, unless they fall under one of nine exceptions to the law. The overhaul law broadened the SEC's ability to invoke these exemptions.
Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press, told the Reynolds Center for Business Journalism that the Dodd-Frank law appeared to give “third-party companies the same protection the company under investigation gets.”
The SEC has been criticized for failing to catch a number of high-profile frauds before the crisis, including a multibillion-dollar ...