Case Detail

FOIA Project Annotation: Judge Beryl Howell has ruled that records relating to the SEC's oversight of the Financial Industry Regulatory Authority are categorically exempt under Exemption 8 (bank examination records) not only because of the broad scope of Exemption 8, but also because Congress, in repealing a provision in the Dodd-Frank Act that increased the kinds of records the SEC could withhold, replaced it by enlarging the definition of what constituted a "financial institution" under Exemption 8 for purposes of SEC oversight. The Public Investors Arbitration Bar Association requested records concerning how arbitrators were chosen for FINRA dispute resolution proceedings. The FINRA was created in 2007 with the consolidation of the enforcement arms of the New York Stock Exchange and the National Association of Securities Dealers to conduct arbitration hearings involving broker-dealer disputes. The SEC's Office of Compliance Inspectors and Examinations oversees arbitration programs at self-regulatory organizations such as the FINRA. The agency responded to PIABA by indicating that any responsive records would be protected by Exemption 8. PIABA then filed suit. Whatever the original congressional intention by adding Exemption 8, the sparse case law on the exemption has consistently concluded that the exemption is quite broad. Howell reached the same conclusion. She noted that "the keystone of the plaintiff's argument is that Congress did not intend, through FOIA Exemption 8, to protect from disclosure records related to a regulatory agency's examination of a financial institution's administrative functions. Indeed, only if this proposition were true would the withholding of such documents be the 'unreasonable result' of which the plaintiff repeatedly cautions. Yet, it is clear that at least one purpose of Exemption 8, apparent from both the plain meaning of its text and the legislative history, is served by withholding the records at issue in this case." She added that PIABA's limited interpretation of Exemption 8 "might make sense, from a policy perspective, to prevent self-regulatory organizations or other industry-policing organizations from becoming 'captive' to the financial institutions they regulate, rather than serving the consumer protection and market integrity functions that they were intended to perform. The text of the statute, however, indicates no such limitation." Howell observed that "the plaintiff's reading of Exemption 8 would essentially render Exemption 4 [which covers confidential financial information] superfluous, or at least would sap Exemption 4 of any meaning that is reasonably distinct from that of Exemption 8." PIABA argued that Exemption 8 only pertained to financial transactions of a financial institution, but Howell pointed out that the court in Bloomberg. L.P. v. SEC had concluded that notes and memoranda which were only indirectly related to financial transactions were covered by Exemption 8. She indicated that "the plaintiff does not explain why records regarding the examination of FINRA's arbitration selection processâ€"which appear to address similar institutional concerns about fairness and transparency and that also likely have an indirect effect on the financial condition or transactions of the financial institutions appearing before FINRAâ€"should be treated differently from the documents at issue in Bloomberg." Although neither party brought it up, Howell pointed out that Congress had amended the Securities Exchange Act in 2010 in an attempt to repeal a provision in the Dodd-Frank Act that granted the SEC the power to withhold investigatory records. The amendment provided that "any entity the SEC regulates under the Securities Exchange Act will be considered a financial institution for the purpose of Exemption 8." Saying that "by adding this definition of 'financial institution' that would apply in FOIA Exemption 8, Congress appears to have given back with the FOIA what it simultaneously intended to take away by repealing section 9291 [of Dodd-Frank]." Howell observed that "indeed, Congress's 2010 amendment to the Securities Exchange Act provides an even broader disclosure shield than section 9291 did because Exemption 8 can be invoked by any 'agency responsible for the regulation or supervision of financial institutions,' not just the SEC." She noted that "there is little question in the Court's mind that Congress's amendment effectively expanding the definition of 'financial institution' was a well-intentioned legislative fix which, as this case demonstrates, has resulted in its own set of unintended consequences."
Issues: Exemption 3, Exemption 8 - Financial institution

Date Filed	Doc #	Docket Text
2011-12-22	1	COMPLAINT against UNITED STATES SECURITIES AND EXCHANGE COMMISSION ( Filing fee $ 350, receipt number 4616044738) filed by PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Civil Cover Sheet)(rdj) (Entered: 12/27/2011)
2011-12-27	2	LCvR 7.1 CERTIFICATE OF DISCLOSURE of Corporate Affiliations and Financial Interests by PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION (Ball, Daniel) (Entered: 12/27/2011)
2012-01-04	3	STANDING ORDER. Signed by Judge Beryl A. Howell on January 4, 2012. (lcbah1) (Entered: 01/04/2012)
2012-01-06	4	RETURN OF SERVICE/AFFIDAVIT of Summons and Complaint Executed. UNITED STATES SECURITIES AND EXCHANGE COMMISSION served on 12/29/2011 (Attachments: # 1 Certificate of Service)(Ball, Daniel) (Entered: 01/06/2012)
2012-01-06	5	RETURN OF SERVICE/AFFIDAVIT of Summons and Complaint Executed as to the United States Attorney. Date of Service Upon United States Attorney on 1/3/2012. ( Answer due for ALL FEDERAL DEFENDANTS by 2/2/2012.), RETURN OF SERVICE/AFFIDAVIT of Summons and Complaint Executed on United States Attorney General. Date of Service Upon United States Attorney General 1/3/2012. (See Docket Entry 4 to view document)(rdj) (Entered: 01/06/2012)
2012-02-02	6	ANSWER to 1 Complaint, by UNITED STATES SECURITIES AND EXCHANGE COMMISSION.(Hardy, Melinda) (Entered: 02/02/2012)
2012-04-09	7	MEET AND CONFER STATEMENT. (Cody, Kathleen) (Entered: 04/09/2012)
2012-04-10	8	NOTICE of Appearance by Kathleen A. Cody on behalf of All Defendants (Cody, Kathleen) (Entered: 04/10/2012)
2012-04-10		MINUTE ORDER (paperless) Upon consideration of the parties' 7 Joint Status Report, the parties shall comply with the following deadlines: The defendant shall file a dispositive motion by May 11, 2012. The plaintiff shall file its opposition and any cross-dispositive motion by May 25, 2012. The defendant shall file a reply in support of its motion and an opposition to any motion filed by the plaintiff by June 8, 2012. The plaintiff shall file a reply in support of any motion it has filed by June 15, 2012. Signed by Judge Beryl A. Howell on April 10, 2012. (lcbah1) (Entered: 04/10/2012)
2012-04-11		Reset Deadlines: Dispositive Motions due by 5/11/2012. Response to Dispositive Motions due by 5/25/2012. Reply to Dispositive Motions due by 6/8/2012. Responses due by 6/15/2012 (tj) (Entered: 04/11/2012)
2012-05-11	9	NOTICE of Appearance by Karen Johnson Shimp on behalf of UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Shimp, Karen) (Entered: 05/11/2012)
2012-05-11	10	MOTION for Summary Judgment by UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Attachments: # 1 Declaration by Kristen Lever, # 2 Statement of Facts Material Facts Not in Genuine Dispute, # 3 Text of Proposed Order)(Shimp, Karen) (Entered: 05/11/2012)
2012-05-11	11	MOTION For an Order Preserving the Right to Assert Additional Exemptions by UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Attachments: # 1 Text of Proposed Order)(Shimp, Karen) (Entered: 05/11/2012)
2012-05-25	12	RESPONSE re 10 MOTION for Summary Judgment , Memorandum and Cross-Motion for Summary Judgment filed by PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION. (Attachments: # 1 Declaration of William Jacobson, # 2 Counter-Statement of Material Facts in Dispute and Cross-Motion for S.J. Statement of Undisputed Facts, # 3 Forest Guardians slip op., # 4 Text of Proposed Order)(Ball, Daniel) (Entered: 05/25/2012)
2012-05-25	13	RESPONSE re 11 MOTION For an Order Preserving the Right to Assert Additional Exemptions and Memorandum in Opposition filed by PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION. (Attachments: # 1 Text of Proposed Order)(Ball, Daniel) (Entered: 05/25/2012)
2012-05-25	15	CROSS MOTION for Summary Judgment by PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION. (See Docket Entry 12 to view document) (dr) (Entered: 06/08/2012)
2012-05-30	14	Unopposed MOTION for Extension of Time to File Response/Reply as to 11 MOTION For an Order Preserving the Right to Assert Additional Exemptions by UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Shimp, Karen) (Entered: 05/30/2012)
2012-05-31		MINUTE ORDER (paperless) granting 14 Defendant's Unopposed Motion for Extension of Time to File Reply in Support of Motion for an Order Preserving the Right to Assert Additional Exemptions. The defendant shall file a reply in support of its motion by June 8, 2012. Signed by Judge Beryl A. Howell on May 31, 2012. (lcbah1) (Entered: 05/31/2012)
2012-06-08	16	REPLY to opposition to motion re 11 MOTION For an Order Preserving the Right to Assert Additional Exemptions filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Shimp, Karen) (Entered: 06/08/2012)
2012-06-08	17	REPLY to opposition to motion re 10 MOTION for Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Statement of Facts Reply supporting SEC's statement of material facts not in genuine dispute and responding to PIABA's statement of material facts not in genuine dispute, # 2 Text of Proposed Order)(Shimp, Karen) (Entered: 06/08/2012)
2012-06-08	18	Memorandum in opposition to re 15 MOTION for Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Statement of Facts Reply in support of SEC's statement of material facts not in genuine dispute and responding to PIABA's statement of material facts not in genuine dispute, # 2 Text of Proposed Order)(Shimp, Karen) (Entered: 06/08/2012)
2012-06-14	19	REPLY to opposition to motion re 15 MOTION for Summary Judgment filed by PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION. (Ball, Daniel) (Entered: 06/14/2012)
2012-07-16		MINUTE ORDER (paperless) granting 11 Defendant's Motion and Memorandum of Points and Authorities by the Securities Exchange Commission for an Order Preserving the Right to Assert Additional Exemptions. The defendant has sought summary judgment on the grounds that all documents at issue are protected from disclosure by Exemption 8 but has also notified the Court that Exemptions 4, 5, and 6 will likely apply to some or all of the documents. ECF No. 11 at 2; ECF No. 16 at 45. In the interests of preserving agency resources, promoting judicial economy, and ensuring the speedy and efficient resolution of this matter, the Court will allow the defendant to preserve the right to assert Exemptions 4, 5, and 6 in this case should the defendant's pending 10 Motion and Memorandum of Points and Authorities by the Securities and Exchange Commission for Summary Judgment be denied. Signed by Judge Beryl A. Howell on July 16, 2012. (lcbah1) (Entered: 07/16/2012)
2013-03-14	20	ORDER granting the defendant's 10 Motion for Summary Judgment; and denying the plaintiff's 15 Cross-Motion for Summary Judgment. The Clerk is directed to close this case. Signed by Judge Beryl A. Howell on March 14, 2013. (lcbah1) (Entered: 03/14/2013)
2013-03-14	21	MEMORANDUM OPINION regarding the defendant's 10 Motion for Summary Judgment and the plaintiff's 15 Cross-Motion for Summary Judgment. Signed by Judge Beryl A. Howell on March 14, 2013. (lcbah1) (Entered: 03/14/2013)
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