Public Investors Arbitration v. SEC

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 5, 2014 Decided November 14, 2014
No. 13-5137
PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION,
APPELLANT
v.
SECURITIES AND EXCHANGE COMMISSION,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:11-cv-02285)
Julie A. Murray argued the cause for appellant. With her on
the briefs was Daniel A. Ball.
Brian Wolfman was on the brief for amici curiae Citizens
for Responsibility and Ethics in Washington, et al., in support of
appellant.
Karen J. Shimp, Special Trial Counsel, U.S. Securities and
Exchange Commission, argued the cause for appellee. With her
on the brief were Melinda Hardy, Assistant General Counsel,
and Sarah E. Hancur, Senior Counsel. Kathleen Cody, Senior
Counsel, entered an appearance.
2
Before: TATEL and BROWN, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
Concurring opinion filed by Circuit Judge BROWN.
TATEL, Circuit Judge: Exemption 8 of the Freedom of
Information Act protects from disclosure records “related to
examination . . . reports prepared by, on behalf of, or for the use
of an agency responsible for the regulation or supervision of
financial institutions.” Congress has now clarified that the
Securities and Exchange Commission is such an agency and—
central to the issue before us—that the Financial Industry
Regulatory Authority (FINRA), a private organization that
oversees securities arbitrations, is such an institution. In this
case, the Commission argues that Exemption 8 allows it to
withhold documents it collected while examining FINRA’s
program for arbitrating disputes between securities brokers and
their customers. The district court agreed, and, for the reasons
set forth in this opinion, so do we.
I.
The Exchange Act of 1934 authorizes the Commission to
delegate “certain governmental functions to private [self-
regulatory organizations].” In re Series 7 Broker Qualification
Exam Scoring Litigation, 548 F.3d 110, 114 (D.C. Cir. 2008).
Pursuant to this sort of delegation, FINRA enforces securities
rules with respect to its members—securities brokers and dealers
doing business with the public. FINRA also facilitates nearly all
securities-related arbitrations and mediations in the United
States. In those arbitration proceedings, the parties are presented
with a list of arbitrators, may strike available arbitrators under
certain conditions, and must rank the remaining ones in order of
3
preference. FINRA collects those lists and appoints a panel
made up of the arbitrators with the best combined rankings.
The Commission has “broad authority” to oversee FINRA’s
practices “relating to customer disputes, including the power to
mandate the adoption of any rules [the agency] deems necessary
to ensure that arbitration procedures adequately protect statutory
rights.” Shearson/American Express, Inc. v. McMahon, 482 U.S.
220, 233–34 (1987). That oversight may take the form of such
“reasonable periodic, special, or other examinations” as the
Commission “deems necessary or appropriate in the public
interest.” 15 U.S.C. § 78q (also known as Exchange Act § 17).
Drawing on this authority, the Commission’s Market Oversight
Program inspects FINRA’s arbitration services and recommends
policy changes when appropriate. See U.S. Government
Accountability Office, GAO–12–625, Securities Regulation:
Opportunities Exist to Improve SEC’s Oversight of the Financial
Industry Regulatory Authority 10–11, 18–19 (2012).
Appellant, the Public Investors Arbitration Bar Association
(PIABA), is an organization whose members represent
individual investors in disputes with securities brokers. As part
of its mission, PIABA promotes the arbitration-related interests
of its constituents. In pursuit of that goal, PIABA sent the
Commission a FOIA request seeking records related to the
agency’s audits, inspections, and reviews of FINRA’s arbitration
program.
Acting on that request, the Commission searched its
archives and identified 65 boxes containing potentially
responsive records, most of which concern the agency’s
responses to consumer complaints about FINRA’s arbitration
process. But it refused to turn those documents over to PIABA,
claiming that the requested records were all protected from
disclosure under Exemption 8. That provision allows the
4
Commission to withhold records that are “contained in or related
to [its] examination . . . reports.” 5 U.S.C. § 552(b)(8).
Concluding that it collected all responsive documents while
examining FINRA’s arbitration program—including during
several inquiries it initiated in response to consumer
complaints—the Commission denied PIABA’s FOIA request
and its subsequent administrative appeal.
With these administrative proceedings behind it, PIABA
sued the Commission in the United States District Court for the
District of Columbia, and the parties cross-moved for summary
judgment. The district court granted the Commission’s motion,
concluding that the requested records “relate[] to” the agency’s
“examinations” of FINRA and that Exemption 8 therefore
protects them from disclosure. Public Investors Arbitration Bar
Association v. SEC, 930 F. Supp. 2d 55 (D.D.C. 2013). In
arriving at this conclusion, the district court rejected PIABA’s
two main contentions: that Exemption 8 protects only
information related to financial examinations and so does not
apply to the Commission’s oversight of FINRA’s arbitration
program; and that the agency failed to identify a particular report
to which each contested document relates. Addressing the first
argument, the district court relied on what it called Exemption
8’s “plain meaning” and purpose, as well as its relationship to
other financial legislation. It emphasized that Exemption 8
nowhere distinguishes between a regulated entity’s financial and
administrative activities, and it found that applying Exemption 8
in this case would serve the enacting Congress’s stated purpose
of protecting the cooperative relationship between the
Commission and the entities it regulates, including FINRA. Id.
at 63–67. As for PIABA’s second argument—that not every
“potentially responsive document . . . relate[s] to [a particular]
examination report of some kind”—the district court held that
nothing in Exemption 8 requires the Commission to point to any
5
such specific report. In any event, the district court found, the
Commission had in fact met that burden, pointing out that the
agency had conducted its inquiries into PIABA’s arbitration
program under its examination authority and that each
investigation “resulted in a writing, either termed a report or
closing memorandum.” Id. at 70–72.
PIABA now appeals. “We review the district court’s
disposition on summary judgment de novo. In the FOIA context
this requires that we ascertain whether the agency has sustained
its burden of demonstrating that the documents requested are . . .
exempt from disclosure under [] FOIA.” ACLU v. DOJ, 655
F.3d 1, 5 (D.C. Cir. 2011) (citations and internal quotation
marks omitted). “[B]ecause FOIA’s terms apply government-
wide,” moreover, “we generally decline to accord deference to
agency interpretations of the statute, as we would otherwise do
under Chevron.” Al-Fayed v. CIA, 254 F.3d 300, 307 (D.C. Cir.
2001).
II.
Read beginning to end, FOIA Exemption 8 protects
information “contained in or related to examination, operating,
or condition reports prepared by, on behalf of, or for the use of
an agency responsible for the regulation or supervision of
financial institutions.” 5 U.S.C. § 552(b)(8). Although the
exemption is a mouthful, Congress has gone to some trouble to
spell things out. It has made clear, for example, that “[f]or the
purpose of FOIA, the Commission is an agency responsible for
the regulation or supervision of financial institutions,” and it has
confirmed that “any entity . . . the Commission is responsible for
regulating, supervising, or examining under [the Exchange Act]
is a financial institution.” 15 U.S.C. § 78x(e). Here, the
Commission does not argue that the requested records pertain to
operating or condition reports. To resolve this case, then, we
6
need determine only whether the requested records are
“contained in or related to” an “examination report” that
Exemption 8 covers. That inquiry proceeds in two parts: we first
address whether the contested records implicate a relevant
Commission “examination” and, if they do, we then ask whether
they relate to a particular “report.”
Examination
Although insisting that Exemption 8 provides no protection
for the records it seeks, PIABA has strikingly little evidence for
that claim. The organization begins with a cursory nod to the
exemption’s text, arguing that “examination report” is “not part
of common parlance” but rather is an “industry-specific” term
with a “special or technical meaning.” Appellant’s Br. at 22–24.
Accordingly, it urges us to read the phrase as a “term of art,”
rather than as a general definition that applies to all agencies in
all situations. Id. Such precise, industry-specific meaning,
PIABA admits, does not emanate from the text of the statute—
or, indeed, from anything else in the U.S. Code.
To tease out the words’ specific meaning, PIABA goes
directly to Exemption 8’s legislative history, which it claims
reveals that Congress intended to protect only financial
information and not “reviews or inspections of a purely
administrative function of a[] self-regulatory organization like
FINRA.” Id. at 24. Guided by that narrow meaning, PIABA
emphasizes that the records at issue here have no bearing on
FINRA’s financial transactions or its fiscal condition. Instead,
they “concern FINRA’s management of its arbitrator pool, its
selection and evaluation of those arbitrators, and the adequacy of
arbitrators’ disclosures.” Id. at 32. The requested documents,
PIABA concludes, therefore do not qualify as the type of
examination reports Congress wrote Exemption 8 to protect.
7
By contrast, the Commission largely sticks to the text of
Exemption 8 and related statutes. The word “examination,” the
Commission tells us, is not at all “obscure.” Appellee’s Br. at
12. Instead, the term has a plain meaning unencumbered by
context. Indeed, the Commission argues, neither Exemption 8
nor the agency’s enabling legislation or regulations limit the
meaning of “examination” to the purely financial. Id. (citing 15
U.S.C. § 78q(b); 17 C.F.R. § 240.17a-1).
To resolve this debate, we begin, as always, with the
statute’s text—and, in particular, with the word “examination.”
See Consumers Union of United States, Inc. v. Heimann, 589
F.2d 531, 533 (D.C. Cir. 1978) (in FOIA cases, “a reviewing
court must accord first priority in statutory interpretation to the
plain meaning of the provision in question”). Mindful of that
canon of construction, this court has explained time and again
that Exemption 8’s scope is “particularly broad.” Id. Rejecting
the claim that Exemption 8 protects only documents whose
disclosure would harm bank depositors, for example, we
observed that the exemption’s “broad, all-inclusive scope”
allows us to apply the statute “as written”—that is, without
adding any extra requirements—“since Congress ha[s]
‘intentionally and unambiguously’ so contemplated.” Gregory v.
FDIC, 631 F.2d 896, 898 (D.C. Cir. 1980) (per curiam) (quoting
Consumers Union, 589 F.2d at 533). We reached this conclusion
despite the general rule requiring that we interpret FOIA’s
exemptions narrowly. See Vaughn v. Rosen, 484 F.2d 820, 823
(D.C. Cir. 1973). After all, “it is not [this Court’s] function, even
in the FOIA context, to subvert” the plain meaning of the statute.
Consumers Union, 589 F.2d at 533.
In this case, the statute’s plain meaning is all but conclusive.
Guided by the dictionary, we think it quite clear that
“examination” reports encompass any report stemming from the
8
Commission “inspect[ing] closely” or “inquir[ing] carefully”
into something. WEBSTER’S NEW COLLEGIATE DICTIONARY 397
(Henry Bosley Woolf, ed., 1977).
That “something,” moreover, is limited by the rest of
Exemption 8’s text. Although the language could be sharper, the
statute’s context and subsequent amendments make clear that it
protects from disclosure only materials that are “contained in or
related to examination . . . reports” that are both (1) prepared by
an “agency responsible for the regulation . . . of financial
institutions” and (2) compiled in the course of that agency’s
regulation of a financial institution. To be sure, a wooden
reading of Exemption 8’s text might lead the reader to believe
that its scope depends only on whether the agency doing the
examination is an agency “responsible for the regulation . . . of
financial institutions,” not on whether the organization that was
the subject of the examination itself qualifies as a “financial
institution.” That reading, however, is out of line with the
original purpose of the statute, as well as the views of every
relevant legislator and industry player.
Congress enacted Exemption 8 to address the “concern[]
that release of bank examination and operating reports could
endanger the fiscal well-being of [] subject banks.” Consumers
Union, 589 F.2d at 537. Reading the statute’s reference to
“financial institutions” to limit only the agency whose records
are exempt would depart from the statute’s original purpose.
After all, such an interpretation would mean that an agency that
regulates financial institutions—say, the Securities and
Exchange Commission—could withhold any examination report
it prepares, even if the report detailed the operations of an
institution that is not even vaguely financial. This can hardly be
what Congress intended when it sought to protect the “well-
being of . . . banks.”
9
Even the Commission’s own chair does not read the
statute’s protections so broadly. Testifying in front of the House
Financial Services Committee in 2010, she observed that
“[t]hough . . . Exemption 8[] does provide important protections
from disclosure for examination materials obtained from
‘financial institutions,’ that term is not defined in the law,” and
it “might not clearly cover [certain] materials and protect them
from disclosure” because “courts have not yet addressed whether
certain entities the Commission has the authority and the
responsibility to examine . . . are financial institutions for
purposes of these FOIA protections.” Legislative Proposals to
Address Concerns over the SEC’s New Confidentiality
Provision, Hearing Before the House Committee on Financial
Services, 2d Session, 111th Congress 10, 12 (2010) (emphasis
added).
Perhaps with that potential confusion in mind, Congress
stepped in to clear things up in 2010 and, in the process,
confirmed the chair’s—and our—reading of Exemption 8.
Responding to concerns that a separate Dodd-Frank provision
muddied the Exemption 8 waters, Congress passed two
amendments to the Exchange Act—and, by reference, to
FOIA—that made apparent once and for all the exemption’s
striking breadth, at least with respect to the Securities and
Exchange Commission. First, Congress confirmed that “[f]or the
purposes of [FOIA], the Commission is an agency responsible
for the regulation or supervision of financial institutions.” 15
U.S.C. § 78x(e)(1). And second, perhaps fearing that a future
court might find that examinations of non-financial entities are
not covered by Exemption 8—if, for example, that court credited
the Commission chair’s reading of the statute—Congress went a
step further, clarifying that “[f]or the purposes of [FOIA] . . . any
entity for which the Commission is responsible for regulating
10
[sic], supervising, or examining under [the Exchange Act] is a
financial institution.” 15 U.S.C. § 78x(e)(2).
Read in a vacuum, the latter provision would make
Exemption 8 entirely circular. Taking both amendments into
account, the text would read: “[FOIA] does not apply to matters
that are . . . contained in or related to examination . . . reports
prepared by, on behalf of, or for the use of [the Commission,
which is] an agency responsible for the regulation or supervision
of [entities the Commission is responsible for regulating or
supervising].” But we think this interpretation would render
Exemption 8 absurd; indeed, we can think of no “plausible
reason why Congress might have intended [this] result[].”
Landstar Express America, Inc. v. Federal Maritime
Commission, 569 F.3d 493, 498 (D.C. Cir. 2009) (internal
quotation marks omitted). Mindful that we are to avoid
absurdities, we conclude that in passing the second half of the
2010 fix, Congress purposefully reaffirmed the chair’s reading
of Exemption 8’s application to the Commission. By clarifying
that “financial institution” means “any entity the Commission
regulates,” Congress conditioned the exemption’s reach on
whether the institution being examined is a “financial
institution”—though, still, not on whether the particular records
would divulge financial data. This means that, in essence, one
should read “examination, operating, or condition reports” to
mean “examination, operating, or condition reports related to
financial institutions.” After all, with the first half of the
amendment, Congress clarified that the Commission is an
agency responsible for the regulation of financial institutions.
Why would it have added a subsection to specify which
organizations are financial institutions if nothing depended on
it?
11
An example should be helpful. To repurpose slightly a
hypothetical one of us used at oral argument, suppose Congress
gives the Commission jurisdiction over the National Football
League and suppose further that the agency chooses to use its
resources to examine the League’s response to the rising tide of
player concussions. Even with these new responsibilities, by the
plain language of FOIA and the newly amended Exchange Act,
the Commission would still be an “agency responsible for the
regulation or supervision of financial institutions,” and the NFL
would have become a “financial institution” for Exemption 8
purposes simply because the Commission regulates it.
Accordingly, any resulting Commission report on football
concussions would qualify as an “examination . . . report
prepared by an agency responsible for the regulation or
supervision of financial institutions” and, crucially, as an
examination report related to a financial institution. To put it
another way, although no one would argue that the NFL is a
financial institution in the traditional sense—billion-dollar
television deals notwithstanding—and although a report on the
League’s concussion protocol is unlikely to expose financial
information, the Commission is indisputably an agency
responsible for regulating financial institutions, and, by the
terms of the 2010 amendment, the NFL would qualify as a
financial institution. As a result of those amendments, then, any
report arising out of the Commission’s examination of the NFL
would be exempt from disclosure whether or not it risks outing
someone’s financial details.
In sum, then, we hold that documents the Commission
collects while examining financial institutions—that is, while
examining any organization the agency regulates—are exempt
from disclosure. This is true no matter the records’ substance so
long as they relate to a resulting report. The Commission
12
satisfies the “examination” requirement here. Whether it also
checks the “report” box is the subject of the next section.
Before we address that issue, however, we think it
important to emphasize that our broad reading of Exemption 8
extends no further than the walls of the Securities and Exchange
Commission. Because the 2010 amendments defined “financial
institution” broadly only with respect to the Commission, this
opinion has nothing to say about the ability of other financial
agencies—say, the Consumer Financial Protection Bureau—to
withhold specific records.
Report
Exemption 8 allows the Commission to withhold records
that relate to an examination “report.” The district court
announced two conclusions on this issue. First, it held that
“Exemption 8 does not require the defendant to identify a
specific report to which the information relates.” Public
Investors Arbitration Bar Association, 930 F. Supp. 2d at 72
(quoting Judicial Watch, Inc. v. Department of Treasury, 796 F.
Supp. 2d 13, 37 (D.D.C. 2011)). Second, it found that, as a
factual matter, “each potentially responsive document [in this
case] does appear to relate to an examination report of some
kind.” Id. at 71. We have little to go on in answering the
doctrinal question of whether each withheld document must
relate to a specific examination report, though district courts in
this circuit have held that it need not. See Judicial Watch, Inc. v.
Department of Treasury, 796 F. Supp. 2d 13, 37 (D.D.C. 2011);
McKinley v. FDIC, 744 F. Supp. 2d 128, 144 (D.D.C. 2010).
Fortunately, we can resolve this case without addressing that
issue, as the Commission has pointed to particular
examinations—culminating in written products—to which the
contested documents relate.
13
PIABA’s argument to the contrary rests entirely on the
Commission’s statement, contained in the sworn testimony of a
senior staffer, that “each potentially responsive document relates
to one of . . . four examinations . . . and/or relates to one or more
customer complaints.” Appellant’s Br. at 44; Declaration of
Kristen Lever, JA 30, ¶ 14 (emphasis added). According to
PIABA, the “and/or” means that the Commission left open the
possibility that any one of the individual documents may relate
only to a report arising out of a customer complaint and not to a
report stemming from an examination. Therefore, PIABA
concludes, the declaration fails to assert that each withheld
document relates to an examination, much less to an
examination report. We disagree for two reasons.
To begin with, the declarant did not stop with her “and/or”
statement. Instead, she explained that all “documents potentially
responsive to PIABA’s FOIA request relate to four examinations
conducted by [the Commission]” and that “some of the
potentially responsive documents may relate to particular
complaints received by the SEC from arbitration participants.”
Lever Decl., JA 27, ¶ 7, 8. In other words, she clarified that all
of the relevant documents relate to a Commission examination,
and some of those documents may also implicate customer
complaints.
But even if we were to credit the “and/or” statement over
these contrary assertions, we would reject PIABA’s argument
because, as we have explained, an “examination report” is any
report arising out of a “close inspection” or “careful inquiry.”
WEBSTER’S NEW COLLEGIATE DICTIONARY 397 (Henry Bosley
Woolf, ed., 1977). PIABA offers no reason to think the
Commission was not conducting such an inspection or inquiry
when responding to customer complaints. That the affidavit
appears to separate examinations from responses to consumer
14
complaints hardly means that such responses are not also
examinations. So even if a particular withheld document relates
only to an inspection of a customer complaint, Exemption 8
applies with full force.
III.
For the foregoing reasons, the Commission satisfied both of
Exemption 8’s requirements and thus properly withheld all
responsive documents. We affirm.
So ordered.
BROWN, Circuit Judge, concurring:
We began in 1978 by interpreting Exemption 8’s
categorically narrow exclusion broadly. Today, we dispense
with that category. A plain reading of the text and our
precedents seem to compel the Court’s conclusion. Yet the
result is a disquieting one. As the district court observed—the
2010 amendment “was a well-intentioned legislative fix
which . . . resulted in its own . . . unintended consequences,”
by “giv[ing] back with [] FOIA what [Congress]
simultaneously intended to take away by repealing section
929I.” Public Investors Arbitration Bar Association v. SEC,
930 F. Supp. 2d 55, 69–70 (D.D.C. 2013). Exemption 8 is no
longer merely a necessary hedge against the disclosure of
critical financial records. Instead, like the mythical
Ouroborus, the amendment may now swallow Congress’s
purported commitment to let “citizens know what their
government is up to.” Nat’l Archives & Records Admin. v.
Favish, 541 U.S. 157, 171–72 (2004).
***
Our Exemption 8 cases are variations on a single theme:
the exemption is “particularly broad” in scope, reflecting
Congress’s “intentional[] and unambiguous[]” intent to craft
an “all-inclusive” definition. Consumers Union of U.S., Inc.
v. Heimann, 589 F.2d 531, 533 (D.C. Cir. 1978). Without
looking to the legislative history to interpret plain statutory
text, Totten v. Bombardier Corp., 380 F.3d 488, 494 (D.C.
Cir. 2004), we may recognize that the universe of financial
regulation has been radically transformed since Congress
originally drafted Exemption 8’s broad language and since
this Court first gave it effect. Initially, Exemption 8 was
cabined by its context. Congress did not reference
“examination” reports in a vacuum; the word is employed as
part of an allied series protecting records contained in or
related to “examination, operating, or condition reports.”
2
5 U.S.C. § 552(b)(8). Such phrasing was intentional. See
Platt v. Union Pac. R.R. Co., 99 U.S. 48, 59 (1878) (“[N]o
words are to be treated as surplusage or as repetition.”) (citing
state law canons of statutory construction). Congress was
drafting under the principal assumption that it was regulating
a world largely consisting of banks and like financial
institutions, and Congress was primarily addressing the
palpable “concern[] that release of bank examination and
operating reports could endanger the fiscal well-being of []
subject banks.” Consumers Union, 589 F.2d at 537.
Disregarding its modestly questionable syntax, the original
text of Exemption 8 makes clear that Congress’s limitation
“of financial institutions” modifies both the “agency
responsible for the regulation” and materials “contained in or
related to examination, operating, or condition reports.” 5
U.S.C. § 552(b)(8). Cf. NORMAN J. SINGER & SHAMBIE
SINGER, STATUTES AND STATUTORY CONSTRUCTION § 47:33
(7th ed. 2014) (“[W]here the sense of an entire act requires
that a qualifying word or phrase apply to several preceding . .
. sections, the qualifying word or phrase is not restricted to its
immediate antecedent.”). And this emphasis on protecting
fundamentally financially-related materials serves as the
central tenet rationalizing Exemption 8’s existence.
Admittedly, our case law has derived a secondary
purpose behind Exemption 8’s promulgation, not moored
directly to the statutory text but of some undeniable, though
not equal, import: “safeguard[ing] the relationship between
the banks and their supervising agencies.” Consumers Union,
589 F.2d at 534. See also Lever Decl. at ¶ 15 (“OCIE
depends on receiving cooperation to effectively and
efficiently conduct the . . . examinations that are at issue here.
In addition, OCIE relies on this cooperation to fulfill its
oversight responsibilities generally, which affects the SEC’s
mission to effectively regulate the securities markets.”). Yet,
3
though this secondary purpose may at times carry significant
weight, when standing alone, it ought not thwart FOIA’s
broad overarching rule favoring disclosure, in all instances
where a vaguely cooperative interest in the regulation of
financial institutions is implicated. See generally Dep’t of Air
Force v. Rose, 425 U.S. 352, 353 (1976) (“The limited
statutory exemptions do not obscure the basic policy that
disclosure, not secrecy, is the dominant legislative objective
of the FOIA.”).
Our case law has oft repeated the mantra of Exemption
8’s “all-inclusive” scope without fully considering the
changed universe in which financial institutions operate. Cf.,
e.g., Pub. Citizen v. Farm Credit Admin., 938 F.2d 290, 291
(D.C. Cir. 1991); Gregory v. FDIC, 631 F.2d 896 (D.C. Cir.
1980). Our precedents serve to bolster and inform our
conclusion—correct in light of the 2010 amendment—that
even documents of potentially dubious relation to core
“financial” data (i.e., arbitration program oversight records)
necessarily fall within Exemption 8’s ambit.
Yet, to the extent our case law fosters today’s result, it
bears questioning the wisdom of the course our precedents
plot. The financial world has changed since the genesis of our
Exemption 8 case law. So has the world in which our
financial system operates. Financial institutions and their
regulators now frequently operate under a haze of public
distrust fueled by repeated regulatory failures and massive,
opaque, and unaccountable bailouts. The public now has
good reason to doubt the rigor of our financial systems’
reliability and oversight.
The ramifications of Exemption 8’s all-encompassing
secrecy therefore reach far beyond PIABA’s (legitimate)
concern for the adequacy and fairness of FINRA’s regime of
4
arbitration. It bodes ill for rebuilding civic trust that
Exemption 8 could be employed to permanently shroud both
the possible reckless conduct by regulated financial
institutions and the particulars of sweeping agency intrusions
into the sphere of the financial marketplace. See, e.g.,
Judicial Watch, Inc. v. U.S. Dep’t of Treasury, 796 F. Supp.
2d 13, 37–38 (D.D.C. 2011) (finding many documents
relating to the Treasury’s Troubled Asset Relief Program, and
related agency investments, protected from disclosure by,
among other things, Exemption 8).
“The fabric of [the] American empire ought to rest on the
solid basis of the consent of the people.” THE FEDERALIST
NO. 22 (Alexander Hamilton). That at times delicate weave
risks coming undone where vague principles of regulatory
cooperation are allowed to inevitably trump the public’s
interest in transparency.
Congress should revisit this ill-conceived amendment and
make sure an apparent miscue does not morph into a serious
misadventure.