Republican lawmaker slams SEC over unauthorized leaks to media

Reuters
Chairman of the House Financial Services Committee, Hensarling questions financial regulators about the effects of the Volcker Rule
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Chairman of the House Financial Services Committee, Jeb Hensarling (R-TX) questions financial regulators …

By Emily Stephenson

WASHINGTON (Reuters) - A Republican lawmaker slammed the Securities and Exchange Commission over leaks of confidential information to media outlets, including Reuters, calling the disclosures "unacceptable."

Representative Jeb Hensarling, who leads the House of Representatives' Financial Services Committee, said in the letter to SEC Chair Mary Jo White that the leaks raised questions about who attends closed agency meetings and hurt the SEC's ability to enforce securities laws.

At issue are Reuters stories from the fall of 2013 about SEC officials' deliberations regarding a settlement with JPMorgan Chase over its "London Whale" trading scandal. A report from the SEC's internal watchdog about nonpublic information included in the stories was itself later leaked to reporters in late July.

The watchdog was unable to identify the sources of the leaks.

"Leaks emanating from closed meeting deliberations jeopardize all of the SEC's enforcement work," Hensarling said in the letter, which was dated Aug. 18 and reviewed by Reuters on Thursday.

Hensarling, who did not mention Reuters by name in the letter, criticized both the initial disclosures and the leak of the watchdog's report.

He asked the agency to detail how it is implementing the watchdog's recommendations for preventing leaks and describe efforts to soundproof the room where closed meetings occur so that unauthorized people cannot listen in from outside.

SEC spokesman Kevin Callahan declined to comment. Thomson Reuters spokesman David Crundwell also declined to comment.

The leak probe began after Reuters reported, citing unnamed sources, on Sept. 17, 2013, that the SEC had approved its portion of a settlement with JPMorgan in a split vote taken in a closed-door meeting.

The agency made that decision public two days later. Reuters later published further non-public details about the vote.

The stories prompted the SEC's Office of Inspector General to launch an extensive, months-long investigation into who had leaked the information.

The report said the SEC failed to remove employees during non-public votes of the five-member commission, and people standing outside the room where votes were held could hear the discussions inside.

Hensarling said the threat of leaks could prevent companies from engaging in settlement discussions with the SEC or discourage commissioners from conducting sufficient dialogue about actions they are considering.

(Reporting by Emily Stephenson; Editing by Karey Van Hall, Martin Howell)

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