or investigation under this title is being conducted, or the (2) in the case of a resolution or request from either House of Congress.* Other statutory provisions authorizing the Commission to withhold information from non-Commission personnel could possibly be construed as including Congress, but I am not aware of any instance in which the Commission has taken such a position. See schedule A, item 30 (disclosure of material contracts), of the Securities Act of 1933, 15 U.S.C. 77aa (30); 5 sections 21(a) (investigations) and 22 (hearings) of the Securities Exchange Act, 15 U.S.C. 78u(a) and 78v; " sections 18(a) (investigations) and 19 (hearings) of the Public Utility Holding Company Act, 15 U.S.C. 79r(a) and 79s; and section 41 (hearings) of the Investment Company Act, 15 U.S.C. 80a-40. 8 6 The Commission has consistently taken the position, however, and has generally persuaded interested congressional committees that, barring exceptional circumstances, it is inappropriate for congressional committees to be furnished nonpublic information pertaining to a pending investigation or Commission adjudication. The Commission has adopted this position (1) to maintain the appearance as well as the fact of agency impartiality in its adjudicatory functions We assume, as to the operation of this section, that there would be a sufficient grant of authority from the Senate or House of Representatives to each committee investigating or inquiring into the functions of the Commission. Cf. Gojack v. United States, 384 U.S. 702 (1966). The Commission has adopted rule 485 under the Securities Act, 17 CFR 230.485, which authorizes the Commission to prevent public disclosure of the provisions of any material contract if the Commission determines that such disclosure would impair the value of the contract. The Commission has also adopted rule 122, 17 CFR 230.122, which precludes any officer or employee from disclosing to any person information obtained in examinations and investigations without Commission authorization. 6 Pursuant to authority contained in the Securities Exchange Act, the Commission has adopted rule 0-4. 17 CFR 240.0-4. precluding any officer or employee from disclosing to any person information obtained in examinations and investigations without Commission authorization. The Commission has also adopted rules prohibiting the disclosure of information detrimental to the national defense or foreign policy (rule 0-6, 17 CFR 249.0-6) and setting forth the appropriate procedure if a registrant desires confidential treatment for certain information contained in any filing made pursuant to the Securities Exchange Act (rule 24b-2, 77 CFR 240,24b-2). 7 In implementing the various provisions of the Holding Company Act, the Commission has adopted several rules relating to disclosure of information. Rule 104(a), 17 CFR 250.104(a), is a general provision which provides for public disclosure of all information contained in any documents filed with the Commis sion, unless otherwise directed. Rule 104(b), 17 CFR 250.104(b), sets forth the appropriate procedure whereby a person filing material with the Commission may request confidential treatment for the information contained in the filing. Rule 104(c), 17 CFR 250.104(e), requires all Commission personnel to keep confidential all information obtained by the Commission in the course of an examination, study or investigation, unless specifically permitted to disclose such information by the Commission. Rule 105, 17 CFR 250.105, governs the disclosure of information concerning defense or foreign policy. The Commission has, by rule 45a-1, 17 CFR 270.45a-1, provided for confidential treatment of names and addresses of dealers of registered investment company securities. In addition to the various rules promulgated by the Commission under the individual statutes it adminis ters, which are set forth in the preceding notes, rule 1D of the Commission's conduct regulation, 17 CFR 200.735-3(d), requires members and employees of the Commission to refrain from divulging confidential or nonpublic commercial, economic, or official information to any person without prior Commission authoriza tion. Rule 2 of the Commission's rules relating to investigations, 17 CFR 203.2, provides: "Information or documents obtained by the Commission in the course of any investigation or examination, unless made a matter of public record, shall be deemed nonpublic." Although the Commission recognizes a basic distinction between Commission and judicial adjudications it should be noted that "[t]he courts will not permit a committee [of Congress] to sit in judgment over people or issues when the identical case or controversy is pending before a court of competent jurisdiction.” Congres sional Power of Investigation, S. Doc. No. 99, 83d Cong., 2d sess. 9 (1954). For present purposes an adjudication is deemed to include any proceeding which involves the determinetion of specific matters presented to the Commission relating to individual companies or applicants. and (2) to avoid any impediment to its investigatory and enforcement functions, 10 Any reluctance on the Commission's part to furnish information would be dictated by the impairment of pending investigations or the probable impact disclosure would have on third parties. In any event, we do not view this matter as involving strictly a Commission determination, exercised as of right. Rather, having due regard for the public charge this agency and the Congress are entrusted with, it has been our practice to raise any questions we may have and to attempt to work out a mutually satisfactory accommodation. In many instances the only problem with respect to furnishing the information may be the timing of the request. In such situations, the termination of Commission consideration of a matter usually cures any problems attendant to the request for information. Where information is already public, its availability to Congress is, of course, automatic and immediate. In those instances involving a request for information which is nonpublic, the Commission itself considers the particular request, after consultation with appropriate staff personnel. With regard to your inquiry concerning ex parte communications, the Commission, in response to a recommendation of the administrative conference in 1964, has adopted a code of behavior governing such communications between persons outside the Commission and members of the Commission or its decisional employees." Pursuant to the provisions of that code, members or decisional employees of the Commission are required to inform the Secretary of the Commission of any oral or written ex parte communications, 17 CFR 200.112 (a) and (b), and the rules provide that notice and, where practicable, copies 12 of such communication (17 CFR 200.113(a)) must be given to all participants to a Commission proceeding. Unauthorized ex parte communications are there stated to include those of: [a] person who intercedes in a proceeding by volunteering a communication which he may reasonably be expected to know might advance or adversely affect the interest of a particular participant in the proceeding, whether or not he acts with the knowledge or consent of any participant or participant's agent. 17 CFR 200.111(g) (6) (ii). In accord with the administrative conference's recommendation, no provision is made for an exception as to Members of Congress or congressional committees. An ordinary inquiry solely concerning the 10 In some instances, cooperation with certain individuals not otherwise available is obtained upon assurance of complete confidentiality. In this manner, the Commission has been able to obtain trade secrets, commercial or financial information and other information necessary to the Commission's varied investiga tory and enforcement functions. The Commission has consistently maintained that the furnishing of this information to anyone without the prior consent of the individual who divulged such information would be inappropriate. Cf. Clarifying and Protecting the Right of the Public to Information, and for Other Purposes, H.R. Rep. No. 1497, 89th Cong., 2d sess. 10 (1966), where this committee referred to the facts that "***a citizen must be able to confide in his Government. Moreover, where the Government has obligated itself in good faith not to disclose documents or information which it receives, it should be able to honor such obligations." The Commission's activities in this regard have been likened to those of a grand jury. See Woolley v. United States, 97 F. 2d 258, 262 (C.A. 9, 1938); In re Securities and Exchange Commission, 84 F. 2d 316, 318 (C.A. 2, 1936). As defined in 17 CFR 200.111(d), decisional employees include, among others, the members of the Commission, the hearing officers assigned to the case, members of the staff of the Commission's Office of Opinions and Review, and the legal and executive assistants to members of the Commission. iz Where copies of communications are too burdensome to be transmitted to all participants to a proceed. ing, the Commission's rules require that detailed notice be given of the receipt of such communication and that any materials be placed in the public files so as to be available for inspection and response. 17 CFR 200.112. status of a proceeding, however, is specifically excluded from the definition of ex parte communications, 17 CFR 200.111(g) (2). With respect to requests for information by individual Members of Congress, the Commission's response varies, depending upon the circumstances. Requests made solely on behalf of a Member's constituents would normally not be treated any differently from the situation where the constituents themselves make the request. In those instances where an individual Member makes inquiries with respect to proposed legislation, the Commission might feel obligated to provide additional information so long as it was not obtained upon assurance of confidentiality. I trust the foregoing will be helpful. If I can be of further assistance, I should appreciate hearing from you. Sincerely yours, HAMER H. BUDGE, Chairman. APPENDIX HOUSE OF REPRESENTATIVES, FOREIGN OPERATIONS AND GOVERNMENT INFORMATION SUBCOMMITTEE, The Honorable RICHARD M. NIXON, DEAR MR. PRESIDENT: The claim of "executive privilege" as authority to withhold Government information has long been of concern to those of us who support the principle that the survival of a representative government depends on an electorate and a Congress that are well informed. As you know, some administrations in the past made it a practice to pass along to executive branch subordinates a discretionary authority to claim "executive privilege" as a basis to refuse information to the Congress. The practice of delegating this grave Presidential responsibility was ended by President John F. Kennedy when he restored a policy similar to that which existed under previous strong administrations, including those of Presidents George Washington, Thomas Jefferson and Theodore Roosevelt. In a letter to the Foreign Operations and Government Information Subcommittee, dated March 7, 1962, he enunciated the policy as follows: *** this administration has gone to great lengths to achieve full cooperation with the Congress in making available to it all appropriate documents, correspondence and information. That is the basic policy of this administration, and it will continue to be so. Executive privilege can be invoked only by the President and will not be used without specific Presidential approval. President Lyndon B. Johnson informed the subcommittee by letter, dated April 2, 1965, he would continue the policy enunciated by President Kennedy. He stated: Since assuming the Presidency, I have followed the policy laid down by President Kennedy in his letter to you of March 7, 1962, dealing with this subject. Thus, the claim of 'executive privilege' will continue to be made only by the President. In view of the urgent need to safeguard and maintain a free flow of information to the Congress, I hope you will favorably consider a reaffirmation of the policy which provides, in essence, that the claim of "executive privilege" will be invoked only by the President. Sincerely, JOHN E. Moss, Chairman. Hon. JOHN E. Moss, THE WHITE HOUSE, Washington, April 7, 1969. Chairman, Foreign Operations and Government Information Subcommittee, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: Knowing of your interest, I am sending you a copy of a memorandum I have issued to the heads of executive departments and agencies spelling out the procedural steps to govern the invocation of "executive privilege" under this administration As you well know, the claim of executive privilege has been the subject of much debate since George Washington first declared that a Chief Executive must "exercise a discretion." I believe, and I have stated earlier, that the scope of executive privilege must be very narrowly construed. Under this administration, executive privilege will not be asserted without specific Presidential approval. I want to take this opportunity to assure you and your committee that this administration is dedicated to insuring a free flow of information to the Congress and the news media-and, thus, to the citizens. You are, I am sure, familiar with the statement I made on this subject during the campaign. Now that I have the responsibility to implement this pledge, I wish to reaffirm my intent to do so. I want open government to be a reality in every way possible. This administration has already given a positive emphasis to freedom of information. I am committed to insuring that both the letter and spirit of the public records law will be implemented throughout the executive branch of the Government. With my best wishes. RICHARD NIXON. MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES (ESTABLISHING A PROCEDURE TO GOVERN COMPLIANCE WITH CONGRESSIONAL DEMANDS FOR INFORMATION) MARCH 24, 1669. The policy of this administration is to comply to the fullest extent possible with congressional requests for information. While the executive branch has the responsibility of withholding certain information the disclosure of which would be incompatible with the public interest. This administration will invoke this authority only in the most compelling circumstances and after a rigorous inquiry into the actual need for its exercise. For those reasons executive privilege will not be used without specific Presidential approval. The following procedural steps will govern the invocation of executive privilege: 1. If the head of an executive department or agency (hereafter referred to as "department head") believes that compliance with a request for information from a congressional agency addressed to his department or agency raises a substantial question as to the need for invoking executive privilege, he should consult the Attorney General through the Office of Legal Counsel of the Department of Justice. |