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Sept. 16 — The Securities and Exchange Commission's Enforcement Division Sept. 16 opposed a Senate bill (S. 356) that would overhaul the Electronic Communications Privacy Act, warning that it would impede civil law enforcement agencies such as the SEC from pursuing financial fraud and other misconduct.
The bill would require law enforcement to get a search warrant, showing probable cause, before accessing Americans' e-mail and data stored in the cloud. The measure “poses significant risks to the American public by impeding the ability of the SEC and other civil law enforcement agencies to investigate and uncover financial fraud and other unlawful conduct,” Enforcement Director Andrew Ceresney said in testimony to the Senate Judiciary Committee.
Because SEC is a civil agency, it cannot obtain the kind of warrant called for by the bill, and therefore the agency “would effectively not be able to gather evidence, including communications such as e-mails, directly from an ISP, regardless of the circumstances,” he said.
The bill is sponsored by Sen. Mike Lee (R-Utah) and has bipartisan support.
Instead of the search warrant procedures included in the bill, Ceresney said the agency favored a civil judicial proceeding, akin to a request for a search warrant, that would allow the SEC to read an individual's e-mails as part of an ongoing investigation, with a judge's approval.
“We are not seeking wiretap authority,” he said. Instead, the agency would even favor the individual's participation in the proceeding, which he said would be more protective of an individual's rights than a warrant hearing.
Privacy advocates have warned that allowing civil agencies to obtain e-mails under a lesser standard would enable them to share it with criminal authorities and skirt constitutional safeguards.
Senators urged caution in making any changes that could allow for more individuals' electronic communications to be read.
“We want these agencies to be effective, but there’s nothing in our constitution that says only certain agencies have to follow the constitution and others don’t have to,” Sen. Patrick Leahy (D-Vt.), ranking Democrat on the committee, said.
Ceresney declined to comment on any specific investigations that have been adversely affected since the U.S. Court of Appeals for the Sixth Circuit held in December 2010 that an internet service provider couldn't turn over subscriber e-mails to government investigators without a warrant.
The SEC has been holding off on issuing subpoenas to internet service providers since that ruling, though, Ceresney said.
Leahy also noted that the SEC has done little to advocate for changes to the law since that ruling.
Later in the hearing, Ceresney said the SEC has kept to the sidelines “in deference to the ongoing discussions” about ECPA reform.
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