The Securities and Exchange Commission is supposed to be about protecting the individual investor. This New York Times story shows how the S.E.C. is obstructing attempts to obtain company accounting information contained in agency files. A private research firm called SEC Insight is resorting to a Freedom of Information Act lawsuit to get the S.E.C. to comply with the law and release its files. By blocking outsiders from accessing the files, the agency is making it harder for investors to discover accounting fraud.
Testifying on May 3 before the financial services committee of the House of Representatives, S.E.C. Chairman Chris Cox said: “When it comes to giving investors the protection they need, information is the single most powerful tool we have. It’s what separates investing from roulette.”
Yet since August 2004, the commission has failed to provide documents relating to 1,700 of SEC Insight’s requests under the Freedom of Information Act. Under the law, such requests are supposed to be answered in 20 days, but in most cases the S.E.C. says it is still looking for documents more than a year after SEC Insight requested them.