December 26, 2008
COMMENTS ON S7-33-08
At at time when transparency and accountability in financial markets are of the utmost critical importance to the nation, the Securities and Exchange Commission has just announced on December 23rd that it will in effect substantially bump up the fees it charges for records requests.
When a simulation of a set of typical records requests is compared using the old fee schedule against the new fee schedule, the typical increase in fees is quite large.
This substantial change in fees alone sends the message that the Commission is imposing additional barriers and toll booths to accessing its information. The Commission website itself explains that many types of SEC records are not published on the SEC website and that access is gained through a FOIA request.
Apart from substantially raising the cost of public access to its records, the schedule quite clearly illustrates the way in which the SEC routinely conflates and lumps together search fees with review fees, despite the fact that noncommercial and newsmedia requesters are not charged review fees.
Anecdotal evidence through interviews of various noncommercial and newsmedia requesters indicates that SEC invoices have a high error rate in favor of charging improper search and review fees to such requesters and conflating the two types of charges. Moreover, the fee invoices typically fail to identify the fee category in which the requester has been placed and the rationale behind the charges. It is much as if one received a credit card bill or restaurant check without any itemization at all.
The SEC frequently incorrectly assumes in its FOIA processing that every requester is a commercial requester, and the invoices it issues reflect that assumption. All too frequently, noncommercial and newsmedia requesters are invoiced for "search and review" fees with no explanation or itemization of what those comprise, or an allowance for the first two hours of search time allotted to noncommercial requesters.
Moreover, the structure of the SEC fees and invoices means that the SEC may be charging review fees improperly in another way. The OMB fee guidelines (which the Justice Department has affirmed as federal policy) state that review time does not include time spent resolving general legal or policy issues regarding the applicability of particular exemptions, yet there is some indication that SEC has been known to do this and the charges for such activity dutifully recorded in the invoices. The inclusion of 40 and 70 dollar per hour senior staff in the fee structure suggests that this will continue to occur, since the participation by such senior staff in the process is often associated with the very activities OMB orders should not be charged.
Finally, the FOIA statute now provides for waiving of most fees, even for commercial requesters, if a response takes more than the time frame allowed under statute. The SEC has oddly omitted all mention of this provision in its proposed rules change.
The SEC's imposition of these new fees without any attempt to rectify the existing known fee problems suggests that the SEC is attempting to impose a new toll booth on access to its information, knowing that by imposing larger fees it will deter the public from seeking access to records, particularly what it terms unsophisticated requesters, who don't know better than to question unwarranted and outrageous fees.
Bernard Madoff would be proud.