Public Investors Arbitration Bar Ass’n v. SEC

Plaintiff-appellant Public Investors Arbitration Bar Association (PIABA) filed a FOIA request for records regarding oversight by the U.S. Securities and Exchange Commission (SEC) of an arbitration program provided by the Financial Industry Regulatory Authority (FINRA). As the nation’s only national securities association, FINRA regulates and enforces securities laws and rules with respect to its members, who are securities brokers and dealers doing business with the public. It also facilitates nearly all securities arbitrations in the United States. The SEC withheld the records under FOIA Exemption 8, which exempts from disclosure 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.” The SEC contends that the records relate to “examination reports” about FINRA or were obtained through the SEC’s ongoing supervision of FINRA and are, therefore, exempt. The district court endorsed the SEC’s broad interpretation of Exemption 8, though it recognized that its decision might permit withholding of everything the SEC collects in the course of its interaction with FINRA.

PIABA appealed the district court’s decision to the U.S. Court of Appeals for the D.C. Circuit, and Public Citizen served counsel for PIABA on appeal. Our brief argued contended that Exemption 8 does not apply to the requested records because the term “examination report” was intended by Congress to cover only a report revealing financial transactions or conditions, or operating or management issues bearing on those financial transactions or conditions, of a financial institution in its role as a traditional market participant. We also argued that the SEC did not otherwise meet its burden of demonstrating that Exemption 8 applies here. In a decision issued on November 14, 2014, the court ruled against us. In a concurrence, Judge Janice Brown urged Congress to amend Exemption 8 to cut back its “all-encompassing secrecy.”