SEC seeking warrant exemption for private email access
Financial regulators with the SEC are now set to propose
legislation that will grant the agency access to electronic
communications without the need for a warrant, according to a
report by The Daily Caller. The agency is the regulatory body
which, among other things, oversees stock and options exchanges.
According to a source familiar with an ongoing discussion between legislators and the SEC, the new surveillance powers would come in the form of an amendment to the Electronic Communications Privacy Act of 1986 (ECPA), granting the agency an exception for civil warrants during civil investigations.
The Senate is currently debating new legislation which would specifically require federal agencies to obtain warrants before searching through private emails. A loophole currently allows federal investigators access to emails without a warrant as soon as they are 180 days old, or have been opened and are still being held by an email server.
Groups such as the Electronic Frontier Foundation (EFF) and the American Civil Liberties Union (ACLU) have for years been pushing for modernization of the 1986 legislation, arguing in large part that technology has simply outpaced the spirit of the law, and left behind unreasonable expectations of privacy.
The ACLU recently made headlines after obtaining and publishing internal documents which alleged that the criminal investigation division of the Internal Revenue Service (IRS) and the FBI were interpreting laws under the ECPA to essentially circumvent warrant requirements.
Though the SEC has itself declined to comment on the allegations, Republican Senator Chuck Grassley’s office did confirm on Friday that the matter was under discussion.
“Staff discussions are ongoing about language to preserve the SEC’s ability to enforce the law in limited situations and protect investors and the public from fraud, but nothing has been finalized,” said spokesperson Beth Levine.
"In addition, Senator Grassley has authorized a hotline to determine if there are other concerns from members that need to be addressed,” she added.
As the government’s financial regulatory body, the SEC is ostensibly looking for greater powers - or at the very least hoping to maintain its current access in order to collect evidence as it pursues civil investigations into possible fraud. For example, this week saw a high profile indictment filing against one of the country’s largest hedge funds, the $10 billion SAC Capital Advisors, on charges of widespread insider trading.
Greater access to email information could allow the SEC to more aggressively pursue a civil case against SAC chief Steven Cohen, or any other executive suspected of breaching the law.
In an April letter to Congress, SEC Chairman Mary Jo White argued that amendments to the ECPA could have “a significant negative impact” on enforcement efforts.
The SEC has “often” asked internet service providers for e-mails “because persons who violate the law frequently do not retain copies of incriminating communications,” White said in her letter to Vermont Senator Patrick Leahy, chairman of the Judiciary Committee and a sponsor of a bill that would enact warrant requirements over electronic information gathering.
The SEC does not currently have the authority to obtain any warrants, although it can coordinate with law enforcement to collect needed evidence. The agency can issue administrative subpoenas, although SEC probes are often conducted stealthily, so as not to tip off the target of their investigations.
Steve Crimmins, a former SEC trial attorney who spoke to Bloomberg this week, agreed that warrant requirements would blunt the agency’s probes.
“In dealing with large corporations which have responsibly maintained email communications, the SEC will be able to get all the email it needs,” Crimmins said. “But in cases with less responsible entities or investigations just involving individuals, the SEC will be severely hampered in getting the evidence it needs to bring a case.”
Still, efforts by the SEC to exempt itself from warrants are likely to be seen with a great amount of skepticism by privacy advocates like the EFF and the ACLU, which are already concerned over present access to private communications by federal investigators.