The opinion of the court was delivered by: ROBINSON
The defendants contend that the information requested by plaintiff should not be disclosed. They note that the staff study examined national securities exchanges and was performed by the agency that is responsible for the regulation and supervision of those "financial institutions." [ 5 U.S.C. § 552(b)(8).] If the study, related transcripts, and documents submitted in the course of investigation are indiscriminately disclosed, it could harm the integrity and security of financial institutions. Further, defendants allege that this information is exempt from disclosure having been gathered in the course of an investigation compiling facts relating to the enforcement of laws. [ 5 U.S.C. § 552(b)(7).] Moreover, the defendants assert that they must protect the privacy and the competitive position of citizens who offer information to assist government policy makers. Thus, they note the exception to disclosure under the Act for "trade secrets" and commercial or financial information obtained from a person and privileged or confidential. [ 5 U.S.C. § 552(b)(4).] Defendants also allege that this information is exempt from disclosure under 5 U.S.C. §§ 552(b)(3) and (5). These sections relate to information specifically exempted from disclosure by statute, and inter-agency or intra-agency memoranda or letters that would not be available by law to a party other than an agency in litigation with the agency.
The purpose of the Freedom of Information Act is to increase citizen's access to government records. It was not intended that in the process of closing loopholes in the requirement that the public not be denied legitimate information, that new loopholes were created. In Bristol-Myers Co. v. Federal Trade Commission, 138 U.S. App. D.C. 22, 424 F.2d 935 (D.C. Cir.), cert. denied, 400 U.S. 824, 91 S. Ct. 46, 27 L. Ed. 2d 52 (1970), it was held that specific exemption of records from disclosure pursuant to the Freedom of Information Act were to be narrowly construed. Where the request for information seeks material outside the needed category, the Court should view the records and determine the discoverability of each record. Further, in order to hold the material exempt from disclosure under this Act, the Court must examine each document and explain the specific statutory justification for withholding that particular item.
In compliance with this direction from the Court of Appeals, this Court issued an Order requiring the production of the requested documents for in camera inspection to determine whether they actually fell within the exceptions of the Freedom of Information Act. One week after the signing of the Order for Production of Documents For In Camera Inspection, and approximately six years after its creation, the Securities and Exchange Commission released for public consumption, the entire unexpurgated Staff Study that is the subject of this suit. This disclosure by the Securities and Exchange Commission makes the questions of exemption, as they relate to the Staff Study, moot. This action on the part of the defendants, however, is an indication on their part as to the merits of their initial assertions.
Upon in camera inspection of the submitted documents, it is the conclusion of this Court that, for the following reasons, all of the requested documents must be made available to the plaintiff.
Second, the documents involved are not inter-agency or intra-agency memoranda or letters. [ 5 U.S.C. § 552(b)(5).] Thus, they are not encompassed by this exception. None of these documents express an exchange of ideas between agencies or their respective staff members. There is no administrative policy-making process exhibited in any of the transcripts or documents presented. This exception,
"[does] not authorize an agency to throw a protective blanket over all information by casting it in the form of an internal memorandum. Purely factual reports and scientific studies cannot be cloaked in secrecy by an exemption designed to protect only 'those internal working papers in which opinions are expressed and policies formulated and recommended.'"
[ Bristol-Myers Co. v. FTC, supra, 424 F.2d at 939.]
Third, although arguably these documents are investigatory files compiled for law enforcement purposes, the agency has not proffered any facts that would show it contemplated within the reasonably near future, a law enforcement proceeding based upon the materials sought. Six (6) years have elapsed and these documents have not been, nor is it alleged that they will be, the basis for either a criminal or civil action against anyone. In fact, the Securities and Exchange Commission's willingness to make public any transcript or document that the person testifying said would be permissible indicates that the Securities and Exchange Commission was not concerned with providing information to possible defendants that was gathered by this investigation. Thus, the exception for such information does not apply in this case. [Bristol-Myers Co. v. F.T.C., supra.]
Fourth, these documents arguably do not concern financial institutions. A "financial institution" as defined by the defendants, means a "bank, trust company, investment banker, or banking association or firm . . . ." [ 15 U.S.C. § 79 et seq., 79q(c) (1971).] This definition does not include national securities exchanges or broker-dealers. The possibility, however, that the integrity of any broker-dealer or securities exchange may be harmed is remedied by the deletion of all identifying material. [Davis, Administrative Law Treatise, 139 (Supp. 1970.)] This study and its related transcripts and documents, initiated and gathered for the express purpose of changing trading rules and related practices of national securities exchanges, does not fit within the exception in the Act for material, "contained in or related to examination, operating, or condition reports prepared by, . . . an agency responsible for the regulation or supervision of financial institutions." By deleting identifying features of the transcripts and documents, before release, the defendants may prevent any possible adverse effect that could befall any of those persons who openly discussed off-board trading with the Securities and Exchange Commission.
This exemption was considered in Grumman Aircraft Engineering Corp. v. Renegotiation Board, 138 U.S. App. D.C. 147, 425 F.2d 578 (1970). Here, an aerospace contractor sought disclosure of Board orders and opinions issued during the 1962-1965 renegotiations of the contracts of fourteen other companies, and also records relating to its own 1965 contract renegotiations. The request for records relating to Grumman's own contract renegotiations during 1965 included correspondence between the Board and Grumman's prime contractor. The Board asserted this material was exempted from disclosure under 5 U.S.C. § 552(b)(4). The Court of Appeals held, as to these documents, that the test for availability was "whether they contain commercial or financial information which the contractor would not reveal to the public." [ 425 F.2d at 582.] Regardless of whether the information was submitted on the express or implied condition that it be kept confidential, a Court should determine, on an objective basis, that this is not the type of information one would reveal to its public. In Bristol-Myers Co. v. F.T.C., the District Court had assumed that the wishes of the submitter of information would govern. [ 284 F. Supp. 745, 747 (1968).] The Court of Appeals, in remanding the action for more particular adjudication on each exemption, suggested that the bare claim by an agency that records are within the "trade secrets" exemption is ...