Privacy Rules Shouldn’t Handcuff the S.E.C.

I have a much better idea, one you will hate.

STOP TREATING THE AMERICAN PEOPLE LIKE CRIMINALS.

Gut the SEC, defund the investigator, eliminate its prosecutorial powers.

Can't the SEC just request that the FBI get a search warrant? Aren't the FBI and the SEC supposed to work together to prevent and control financial fraud?

Thank you for this excellent article. This is certainly gut wrenching news. Clearly we have the foxes guarding the hen house in America.
Obama please find someone to aggressively regulate Wall Street!

What's the difference. The SEC is next to useless anyway. Look how badly they blundered the Madoff case even though Harry Markopolos spoon fed it to them numerous times over many years.
Also, how many ex SEC people wind up working at the very institutions they were "regulating" before they left when the right offer came. Nobody seriously wants to ruin chances of future employment when they leave the agency.

If the SEC can't even stop high speed trading firms from paying a fortune to have there servers right next to the NYSE servers, so they can get information milliseconds ahead of the next guy, (which is worth trillions to them) then the SEC will be ineffective whether you do this with warrants, or that without them.

The SEC has proved itself to be akin to the Titanic. And rearranging a few deck chairs on board ain't gonna save that ship!

Citing criminal acts (Ponzi schemes, insider trading, and the like) as justification, Ms. White seeks continuation of a capability very similar to what PRISM provide the NSA - access to private information held by third parties based on court orders obtained on a weaker basis than required for a search warrant.

I am not sure we should feel all warm and fuzzy simply because the SEC surely will use such an authority judiciously and only to obtain information for the best of purposes. That's rubbish. If criminal matters are involved they should turn the case over to the appropriate US Attorney, who should get a warrant if necessary to obtain evidence.

This is all perfectly reasonable if, and only if, the "administrative warrant" proposed for the SEC and other civil agencies requires the same probable cause threshold the Constitution demands of our other law enforcers.

If this proposal is just a last-ditch effort to save her agency's fast-and-loose rules from long-overdue ECPA reform, then Ms. White remains on the wrong side of history. To wit, as of now, her agency (and others) have been employing administrative subpoenas to force individuals to produce documents, or to force their Internet service providers, email services and other third parties to produce communications, without having to show probable cause. Merely a showing of "reasonable suspicion" that the documents would turn up something of "relevance" to an investigation.

And while she acts like this is unique to civil agencies that can't serve criminal warrants, she's hiding the fact that law enforcement agencies can use these subpoenas too.

The electronic communications privacy act is a relic from the 1980s. It makes arbitrary distinctions removing emails stored over six months from the privacy protections of the fourth amendment. It was not written for a world where your entire life is on a device in your pocket, where your most intimate thoughts and conversations pass through a third-party intermediary. Time to correct those deficiencies after DECADES of obstructionism from the FBI, SEC and other agencies despite rare bipartisan agreement.

Civil rights may protect criminals, but they protect innocent people too.

Wow this is an incredibly biased piece:

"make it considerably easier for those who would steal hard-earned money from investors looking to save for their mortgage, retirement or children’s education"

Oh, give me a break!

"Under the new bill, the government would be required to get a warrant to obtain someone’s electronic communications from an Internet service provider "

Is that a bad thing? Right, the retirement accounts, I forgot.

Sorry Mary Jo, I am not sympathetic to your cause. If a police officer needs a warrant to tap my phone or read my snail mail, then you should need a warrant to "tap" my emails. It really is that simple.

If you want to argue that your agency needs an easier path to submit a request for a criminal warrant to grant you these powers, then we can talk. But not the powers you are asking for here.

This is good legislation in the always present fight to preserve civil liberties from Government overreach.

Unfortunately the same trend applies elsewhere: the french regulator recently lost some of its means of action, without much emotion from the politics. Despite the fact that the #1 aide of the president is a previous head of that regulator.
I think that in the two most publicized local cases of suspicion of insider trading, the "suspects" will probably "win"..

Totally shocking how many have failed to understand what is at issue.

First every member of the public who brings a claim in court can issue a subpoena to third parties to produce evidence in a court proceeding. The opposing party or the person who received the subpoena has the right to got to court to object to producing that evidence if they wish to.

So the SEC really is not seeking any power greater than what a private citizen can do by way of a court subpoena. The difference is the SEC wishes to request evidence before the SEC brings a case either in court or administratively. The safeguard to the public is that the subject of the investigation gets notified before any evidence is produced & so can proceed to court to object to that production of evidence just as in the case of a court case between two private parties.

It doesn't make any sense to require the SEC to go to a law enforcement agency to have that agency issue a warrant or subpoena when the subject of an investigation will get no greater safeguards from doing so

H.R. 699 bill, by your republican congressmen, is a corrupt measure to help hide cheaters from the law. One can see why some of us call them political prostitutes, able and willing to sell themselves to the highest bidder. To their shame, our loss.

There's another argument here:

Does a corporate entity have any right to privacy at all? Not really. A corporate entity isn't a natural person. It doesn't have constitutional rights. Privacy laws are for people, not companies. A reasonable view would be that companies have the natural right to conduct business in confidence, but no right to withhold information on the basis of privacy if required to provide information before a court or statutory authority.

The laws related to crimes are not unconstitutional. Fraud and business crimes are crimes like any other. This is normal civil administration, and it needs to be able to do its job. The 14th Amendment provides plenty of legal rights for individuals regarding any challenge they want to make to perceived invasions of privacy.

It can also be argued that destroying electronic communications evidence is the same thing as the normal legal position regarding destroying evidence - A court doesn't have to tolerate that as any sort of excuse or defense. Proof of destruction of evidence is an own goal, if it's played that way.

Suggestion for the SEC - The weak spot is the corporate communication cycle itself. Target the associated trails, not just the emails and texts. There are always other recipients, cc's, etc elsewhere. You can destroy your own comms, but not that kind.

Also - HR 699 also raises the ante considerably for "business" - Obstructing a warrant is a serious offense. Still want to pass it, guys?

You are assuming members of Congress receiving millions from white collar criminals actually want these criminals to be prosecuted.

GET A WARRANT.
E
T

A

W
A
R
R
A
N
T

There is no time the government shouldn't be required to get a warrant. This bill is a major step forward, and if the people are committing crimes in confident we can find lawful ways to bring them to justice that don't require giving the Gov even more power than it already has.

As if the S.E.C. ever pursued large-scale fraud to begin with.

Nice to know though that republicans are making S.E.C. hires' revolving-door careers even easier.

GOP = pawns to the ruling class

If the power to obtain communications is so important to the SEC, why did Chairman White testify just last year that the Commission has not used its existing subpoena power to obtain email from ISPs? (See: https://iapp.org/news/a/sec-admits-it-doesnt-use-powers-derived-from-ecpa/).

Let's be honest here, the SEC wants to dramatically increase its powers to demand your private papers without having to do the work of asking you for them. And if the SEC gets this power so will every other similar government agency.

"Require civil law enforcement agencies to first seek electronic communications directly from an individual before seeking them from an Internet service provider or commercial email service. "

This doesn't make any sense. First you argue that notifying the individual allows them to destroy evidence, then you propose that you should have to notify the individual first. I recognize the need for investigation, but also the need for real judicial oversight which is absent with administrative subpoenas. The solution seems straightforward. If the SEC is the agency which should be investigating, then it needs the power to perform an investigation. If that means a warrant is needed, fine, the SEC should be empowered to request one from the court.

“…and the law should also evolve. But we should do it in a way that protects both our privacy interests and the integrity of our financial system.” Integrity? My interests? Give me a break.

It is our lawmakers who have created the ‘house always wins’ mentality when it comes to Wall Street. It’s Democrats like Hillary Clinton, Barney Frank & Charles Schumer, it’s Republicans like Marco Rubio & Mark Kirk. Who loses? You, me, and our neighbors and ideological ‘differences’ are merely a smoke screen to entertain us while the truth is masked. Do people have no desire to admit how corrupt our system has become?

The SEC is powerless to do anything to reign in plutocratic and corporate greed and when they have tried, the fact is the Obama administration and both houses have resisted them. Simple things like requiring lead audit partners to sign audits – ‘no thanks’ said Wall Street and the exec. & congress listened. When MJ White advocated reducing systemic risk via regulating products and practices; not just the companies. Surprise surprise the White House, Treasury, and the Financial Stability Oversight Council said ‘NO WAY’.

The law should evolve by prosecuting many financial crimes under criminal statute. We should not stand for the hypocrisy of our ‘leaders’ like HRC and we should support people like Sen. Sanders.

The game is rigged, the message clear: Don't mess with rich people but do whatever you want to the people we view as the dregs of society.

The S.E.C. handcuffs itself. It wasn't some piece of email that prevented it from seeing Enron, Madoff, the Reserve fund, or sub-prime securities. As a reader pointed out below, the S.E.C has a reputation of never admitting mistakes and putting people wrongly out of business. Although not responsible, it could better spend its time fixing arbitration, which the Times has covered elsewhere. I'm glad Ms. White wrote this piece. It shows you just how much blood-lust the S.E.C. has for prosecuting people instead of making it impossible for them to do business in the first place.

So all those who beat up the SEC for not catching Madoff or heading off the 2008 collapse faster now want to make its job harder?

And why are those who yell about being tough on crime the loudest the most willing to hamstring the SEC?

I misread the first sentence of paragraph six, the first time, thought I read "lawmakers" instead of "lawbreakers". Sadly, with the current Congress, it's hard to tell the difference.

When you give more freedom to a government you are simultaneously restricting your own freedom.

The SEC has no right to exist, and Congress had no right to establish it. It is unconstitutional, because the rules it creates have the force of law, and the Constitution does not permit anyone other than Congress to create law. Unelected, politically-appointed bureaucrats (who are by definition the bottom of the barrel in terms of talent, wisdom, and experience) should have no authority to decide what Americans should or should not do.

For example, part of the 2008 Meltdown was caused because the ratings agencies consistently rated mortgage-backed offerings as AAA, even though these were obviously "toxic" to anyone doing any due diligence. The ratings agencies were approved by the SEC - without the SEC approval, institutional investors cannot legally adhere to someone's advice.

The SEC was unable to discover Madoff's ripoff. The SEC was unable to discover Enron's ripoff - which Krugman assisted in hiding. Given the SEC's ineptitude - again, bottom of the barrel - handcuffing it is the nicest thing we can do.

Email trails can also manufacture, divert, shift evidence etc. Never mind Wall Street, even the little guy can game this easily, very easily. Not inconceivable to script an entire email discussion, leak it selectively much-after-the-fact, and have SEC tied-up trying to figure useless email trails, for months if not years. Probably been done already many times with countless laughs. Heck, the big guys probably hire top screenwriter talent just for making up emails.

Ms. White should consider the new law a blessing, and redirect efforts where it's really required: preventing crime from occurring in the first place. Instead of useless fishing expeditions that _maybe_ culminate in chump-change settlements without admission of guilt, as is the practice today. In any case, the emails aren't going anywhere, SEC can always refer to the DA who will do the needful.

Maybe that's the problem? The SEC doesn't want to ever go the criminal path? It would surely explain the lack of jail time for WS crooks. By the time the SEC get around referring to DOJ, everyone's been tipped-off and the evidence sanitized. The rule should fix all that. The minute the SEC get the urge for a warrant, they would have no choice but to refer to the pros whose job it is to lock the crooks inside.

Finally, a story of white-collar prison crowding in the horizon! 60 minutes stories on financial crime, all based on inhouse jail interviews!

Hurry-up, this bill promises to make America great again.

Why on earth does Ms. White, or anyone else, think that a Republican dominated legislature will ever do anything but pander to the worst elements of K Street and Wall Street?

While I don't think the SEC should be hamstrung by this catch-22, neither do I think they should have more authority than they already do. A subpoena is a powerful weapon with serious penalties for ignoring one. It should be sufficient for their purposes. The bigger question though is how to update the ECP act of 1986 to maintain what protections we have, and enhance them if possible. Various agencies of the government already skirt the law, some of them flout it in this regard. We are supposed to be secure in our persons, houses and letters, per the constitution. No amount of rationalization or convoluted twisting of meaning, even by the likes of a grand master such as John Yoo, should be allowed to abridge that guarantee to any extent whatsoever. On the other hand, we all have a vested interest in thwarting the activities of those who would rob or defraud us. Ms. White is intimately familiar with the use of both warrants and subpoenas, and knows full well she has the means to get either when circumstances call for it, albeit in cooperation with other agencies. We must also be wary of overzealous prosecutions. As someone else here said, the SEC doesn't like to go away empty handed. It's fairly well known that the feud between Bobby Axlerod and Chuck Rhoades on "Billions" is base not so loosely on Preet Bharara and Steve Cohen. While I've seen no evidence of whips and chains, the SEC already has plenty of handcuffs at it's disposal. Let's not give them waterboards.

The "simple solution" near the end, now that I've got to look at it, is quite sensible (even overly nice) and Congress should definitely support it.

Despite my unwavering loathing of mass surveillance, I would even support SEC access to the NSA's trove, provided they notify suspects (on arrest) and courts (in trial or pre-trial) that they were wiretapped and not be allowed to "reconstruct" non-snoop evidence from the snoop.

It is highly unconstitutional and I would rather see every NSA manager and employee weep at The Hague, but I would not mind it so much for the narrow purpose of catching econotraitors like banksters in action. If we are gonna flout the Piece of Paper so blatantly, we may as well put it to use to stop not only those few terrorists who attack on occasion but those banksters who attack all of us continuously right now.

According to https://www.congress.gov/bill/114th-congress/house-bill/699/

H.R. 699 is sponsored by
Rep. Yoder, Kevin [R-KS-3] (Introduced 02/04/2015)
https://www.congress.gov/member/kevin-yoder/Y000063

Indeed the SEC deserves a stronger hand, unfettered by Congress's and Wall Street's bribery; but often even when they DO have both the tools and the taxes to get things done and econotraitors jailed, they let them off scot free--or worse.

Any regulatory and budgetary follow-through by Congress must lead enforcement follow-through by the SEC itself. Otherwise, not even we 99% will care to support more resources for the commission.

This piece would have served us all better had it given more information on why H.R. 699 was modified in a way Mary Jo White dislikes. Information such as, was this a bipartisan effort or was the vote strictly along party lines, would give the reader a greater overview of the issue. Deeper detail, I'm certain, is available. Not to mention, Mary Jo White's solution doesn't seem to cure the problem she describes, as notifying the individual whose emails are being subpoenaed would give them ample opportunity to delete incriminating evidence.

The Republicans again and again at work for their constituents, the wealthy.

This article was written by Mary Jo White who is the chair of the Securities and Exchange Commission and is basically an Appeal to the Public as well as be made aware that The House of Representatives has already passed a Bill that in its current form will deny the SEC the ability to obtain any emails or other electronically stored information to help it protect the public from financial fraud, insider trading and all the other very real and damaging crimes committed by companies and individuals for their own interests regardless of the harm and consequences to other individuals, institutions , markets or even the economy itself.

Often the author tells us, it is by these electronic Communications only, that these illegalities are discovered and proved in court.

Unless something is done to stop or as suggested, make a few simple revisions to the Bill before it is passed into law, then Wall Street once again will be free to make transgressions with almost complete impunity , knowing that without the ability to garner electronic information, the SEC will not be able to successfully pursue many cases as their will be little evidence to prove malfeasance.

This is a very real appeal for help.

Please contact your Representative and support Ms White for the SEC to pursue it's mandate and protect consumers from wrongdoing and criminal acts.

It's up to you.
Tell Congress that you will not allow Wall Street to get away with it nor the corrupt Politicians who allowedthis change

This attempt by a bought off congress is an outrage. One big question is who are the representatives who are leading this effort? Why is there a reluctance to name names of these people? How can anything change if the media doesn't identify those in the employ of the criminals?

I'd like to turn this op-ed around and state it in a way that the author might not have intended:

Here, the S.E.C is asking for powers that are normally reserved for criminal enforcement, so that it can use them in civil law enforcement. It's no different than a mall security officer asking for military-grade hardware to assist in his job.

Now, the mall security officer could argue (as the SEC has here) how important his job is, and how much easier it will be with his new scary weapons. That's beside the point: We have not given mall security officers that equipment because as much as it "helps," mall security officers only "enforce" a very narrow slice of laws. The rest is left to criminal investigators, police, etc.

I have no doubt that the SEC would appreciate all sorts of powers. Warrantless wiretaps? Access to NSA phone records and meta-data at the individual level? Heck, why not throw in extraordinary rendition while we're at it? Anything in the name of enforcing civil laws and "protecting the little guy."

No thanks.

Few of you have ever been the target of an overzealous (or even unwarranted) SEC investigation. The SEC doesn't like to leave empty handed, so you'll often find yourself having violated something or another. Providing unfettered access to personal ISP data simply opens the door to greater abuse, and to what end exactly?

Enforcement of civil law is all very well. But members of Congress must answer to a higher authority... K Street.

You think "law enforcement" can be trusted? Really? Well, would you be interested in buying a bridge in Brooklyn?