Trade Secrets of the Securities and Exchange Commission

The new financial reform law gives the SEC extensive investigatory powers to seek out information from the regulated, but limits how much of that information must be provided to the public under the Freedom of Information Act (FOIA).

The Commission says the broad exemption from FOIA is necessary to gather confidential business data from industry insiders who otherwise would fear that their trade secrets would be made public.

The Chicago Tribune, in an editorial, isn’t buying that rationale.

Instead, the Tribune says, the new law “gives big cover for an agency that has a track record of failure in its regulatory efforts.”

As an example, the paper points to a Fox Business Network suit against the SEC that seeks internal agency documents about its botched investigations of Bernard Madoff and Allen Stanford. The SEC is invoking its FOIA exemptions.

Drawing the right lines for trade secrets in these regulatory contexts is important and undoubtedly difficult.

That said, it’s hard to imagine any Madoff trade secrets worth the definition.