The SEC proposes to exempt portions of 3 new systems of records from provisions of the Privacy Act to the extent that the records contain investigatory materials compiled for law enforcement purposes.  The Commission also plans technical amendments to its Privacy Act regulation exempting specific systems of records from certain provisions of the Privacy Act.  In a companion release published elsewhere in this issue, the Commission is giving concurrent notice of three new systems of records pursuant to the Privacy Act of 1974.

    Supplementary Information.   The Commission proposes to exempt the 3 systems of records - (i) “Tips, Complaints, and Referrals (TCR) Records (SEC-63)”;  (ii)  “SEC Security in the Workplace Incident Records (SEC-64)”; and, (iii) “Investor Response Information System (IRIS) (SEC-65)” - from 5 U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (H), and (I), and (f) and 17 CFR 200.303, 200.304, and 200.306, insofar as they contain investigatory materials compiled for law enforcement purposes.  The Privacy Act allows Government agencies to exempt certain records from the notification, access and amendment provisions. If an agency claims an exemption, however, it must issue a rule to explain the reasons why a particular exemption is claimed. The proposed exemption would be applicable except under the circumstances set forth in the provisions of section (k)(2) of the Privacy Act.

 

The TCR Records (SEC-63) system of records contains records related to tips, complaints, referrals of misconduct, or related information about actual or potential violations of the federal securities laws; investor harm; conduct of public companies; securities professionals; regulated entities; and associated persons. This system of records may include investigatory materials that were compiled in connection with the Commission’s enforcement responsibilities under the federal securities laws. Such material may consist of unsolicited and often unverified statements concerning individuals, information received from confidential sources, as well as reports from the Commission’s investigators and other law enforcement personnel. The disclosure of the existence of investigatory materials could seriously undermine effective enforcement of the federal securities laws by prematurely alerting individuals to the fact that they are under investigation, by giving them access to the evidentiary bases for a Commission enforcement action or seriously hampering the Commission’s case in court or before an administrative law judge.

The SEC Security in the Workplace Incident Records (SEC-64) system of records contains records related to reports involving incidents of assault, harassment, intimidation, bullying, weapons possession, or threats at the SEC. This system of records may include investigatory materials that were compiled in connection with inquiries or investigation of potential or actual incidents of violence by and against individuals at an SEC facility. The disclosure of information as it relates to investigatory materials or the identity of sources of information may seriously undermine the safety and security of employees in the workplace.

Access to such information could allow the subject of an investigation or inquiry of an actual or potential criminal or civil violation to interfere with and impede the investigation, tamper with witnesses or evidence, and to avoid detection or apprehension.

The IRIS (SEC-65) system of records contains records related to complaints/inquiries/requests from members of the public and others. This system of records may include investigatory materials that were compiled in connection with the Commission’s enforcement responsibilities under the federal securities laws. Such material may consist of unsolicited and often unverified statements concerning individuals, information received from confidential sources, as well as reports from the Commission’s investigators and other law enforcement personnel. The disclosure of the existence of investigatory materials could seriously undermine effective enforcement of the federal securities laws by prematurely alerting individuals to the fact that they are under investigation, by giving them access to the evidentiary bases for a commission enforcement action or seriously hampering the Commission’s case in court or before an administrative law judge.

The Commission also proposes to amend its inventory of exempted systems of records by changing the name of the system of records titled: “Office of Personnel Code of Conduct and Employee Performance Files (SEC-38)” to “Disciplinary and Adverse Actions, Employee Conduct, and Labor Relations Files”. In a companion release the Commission is publishing a Privacy Act system of records notice to make technical amendments to this system of records to incorporate minor corrective and administrative modifications that have occurred since the notice was last published and will update the system name to more accurately reflect the records contained in the system. The Commission is amending its inventory of exempted systems of records reflect the new title of this system of records.

For further details, go to:   [SEC Proposed Rule Release PA-45, 5/18/11]