Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Securities Regulation Daily, August 22, 2014

House Oversight Chair cautions SEC on leaks from closed meetings

By Jim Hamilton, J.D., LL.M.

The House SEC Oversight Chair has asked the Commission to provide, by September 5, its plans to implement all of the recommendations made by an Inspector General report on leaks of confidential information from SEC closed meetings, including any disciplinary action taken against individual employees. In a letter to SEC Chair Mary Jo White, Financial Services Committee Chair Jeb Hensarling (R-Tex.) also requested SEC plans to soundproof the meeting room or post security outside of the room to prevent unauthorized SEC employees and other individuals from listening to the closed proceedings.

Chairman Hensarling emphasized that leaks emanating from closed meeting deliberations jeopardize all of the SEC’s enforcement work. For example, entities will be less willing to engage in settlement discussions if in so doing they run the risk of the underlying facts of the case entering the public domain. Moreover, SEC commissioners will be reluctant to engage in a robust dialogue with staff on enforcement matters, thereby leading to less effective enforcement outcomes.

The FSC Chair also pointed out that, since the SEC conducts all of its investigations confidentially, leakers will render meaningless the SEC’s well-known policy to neither confirm nor deny the existence of any investigation as long as the leaker knows that he or she can speak freely to the press and divulge confidential information without any consequences. Further, when staff depart SEC employment with knowledge of confidential and non-public information, they must not use that information to further their own careers.

More broadly, the Chair noted that attendance at closed SEC meetings is a privilege rather than a right. The SEC’s penalties impact corporate behavior and serve as a warning to all SEC-regulated entities. Mere intellectual curiosity is not sufficient justification for an employee to stop his or her work and attend a closed meeting. The Chair advised that SEC employees who have not played a meaningful and substantial role in the enforcement matter pending before the SEC should not be attending a closed meeting.

MainStory: TopStory Enforcement

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.


A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.