The Securities and Exchange Commission has provided a second partial response to Empower Oversight’s Freedom of Information Act request from May 15, 2023. The request centered around communications about the oversight organization’s referral of evidence to the Inspector General, pointing to ethical violations and related litigation.
Empower Oversight sought records of communications about the group’s May 2022 referral to the SEC’s Office of Inspector General (SEC OIG), its FOIA litigation with the SEC, and the agency’s litigation selectively targeting one cryptocurrency, XRP, for enforcement.
According to the SEC, 257 pages were released in response to part 3 of Empower Oversight’s request, with the exception of certain information that was been withheld. The agency also sent 27 pages in response to parts 5 and 6 of Empower Oversight’s request, with the exception of certain information.
Click here for the SEC cover letter to the documents.
Click here for the partial response to part 3.
Click here for the partial response to parts 5 and 6.
Background of Empower Oversight SEC FOIA efforts (click here for all major SEC FOIA document productions received on SEC oversight.)
Since August 2021, Empower Oversight has pressed the SEC for more transparency about the decision making on cryptocurrency issues at the SEC. The agency slow-walking and bad faith over nearly three years has forced litigation to pry documents loose from the agency.
In August 2021, Empower Oversight submitted a detailed FOIA request to the SEC seeking all communications between senior SEC officials, their former and future employers, and related entities regarding cryptocurrencies. Since then, Empower Oversight has been at the forefront of the battle for SEC transparency. In December 2021, Empower Oversight filed a lawsuit against the SEC in the Eastern District of Virginia seeking to compel the agency to provide responsive documents to the FOIA requests.
In May 2022, Empower Oversight sent a referral to the SEC OIG based on documents that raised questions about the failure of the SEC and its Ethics Office to properly manage Hinman’s conflicts of interest regarding cryptocurrency issues, contacts with his former law firm Simpson Thacher, and that firm’s interest in promoting one cryptocurrency over others.
In October 2022, Empower Oversight filed its opposition to the SEC’s motion for summary judgment in the ongoing FOIA lawsuit over documents related to conflicts of interest and selective enforcement in cryptocurrency cases.
The SEC had initially agreed to search for records of communications between SEC officials and promoters of certain cryptocurrencies using a specific list of names that the SEC asked Empower Oversight to provide. However, the SEC then promptly reversed course and had refused to search for those records for nearly two years since the August 2021 request, which is still the subject of ongoing Freedom of Information Act (FOIA) lawsuit against the SEC.
In Dec. 2022, Empower Oversight filed a new FOIA request regarding conflicts of interest and selective enforcement by former high-level officials regarding cryptocurrencies. The December 2022 request was an effort to counter the SEC’s bad faith gamesmanship in refusing to conduct searches using the search terms it solicited from Empower Oversight more than a year earlier. The December 2022 FOIA requests to the SEC sought communications between senior SEC officials and their former and future employers and related entities regarding cryptocurrencies by name.
Former senior SEC official William Hinman received millions of dollars in compensation from his former employer, Simpson Thacher, while helping guide the SEC’s enforcement decisions on cryptocurrencies. Simpson Thacher was part of a group that promoted the native cryptocurrency on the Ethereum network, Ether. Of particular interest is a June 14, 2018 speech where Hinman publicly declared that Ether was not a security while the SEC has claimed in enforcement actions that other similar cryptocurrencies were unregistered securities.
In May 2023, Empower Oversight filed a new complaint against the SEC in the United States District Court for the District of Columbia seeking to compel the SEC to comply with the December 2022 FOIA request.
The SEC turned over documents following the May FOIA lawsuit brought by Empower Oversight in the District of Columbia from a December 2022 FOIA request to the SEC. Pursuant to the FOIA request and the lawsuit, the SEC produced 324 pages of additional documents.
In September 2023, Empower Oversight requested through FOIA communications between Clayton, the former Securities and Exchange Commission (SEC) Chairman, and numerous people he may have interacted with regarding the agency’s improper handling of cryptocurrency enforcement decisions.
In March 2024, Empower Oversight continued to request documents through FOIA on Hinman and Clayton using new search terms based on findings from documents in previous FOIA requests.
On March 18, 2024, Empower Oversight filed a lawsuit against the SEC over its failure to comply with an additional Freedom of Information Act after the SEC delayed its searches by asking multiple rounds of clarifying questions and asking Empower Oversight to narrow its requests. Then the SEC failed for months to communicate with Empower Oversight about the May 2023 request. In January Empower Oversight proposed to the SEC a basic timeline for the SEC to provide updates on the progress of the request as well as a schedule for processing records. Yet the SEC was unwilling to commit to such a schedule, and nearly 9 months after the request still had not produced a single page.
In June 2024, Empower Oversight pressed the SEC for additional records regarding the public declarations that multiple cryptocurrencies were not a security by both William Hinman, the former director of the Corporate Finance Division, and Jay Clayton, the former Chairman of the SEC.
On July 16, 2024, Empower Oversight pressed the Office of the Inspector General at the Securities and Exchange Commission (SEC-OIG) to release its report on conflicts of interest by senior Securities and Exchange Commission (SEC) officials and the agency’s selective enforcement decisions on cryptocurrencies. SEC officials had indicated the OIG was “in the final stages of completing” its report earlier in the year. Empower Oversight also urged the OIG to address the potential conflicts of former SEC Chair Jay Clayton in its review.