SEC Wants New Warrantless Snooping Powers It Doesn’t Need

This week, CDT, ACLU, Heritage Action, and Americans for Tax Reform sent a letter to the Securities and Exchange Commission calling on the agency to drop its opposition to ECPA reform.

The Electronic Communications Privacy Act (ECPA) says that government agencies can access stored email and other content in the cloud without a warrant. Support for reform, which has always been strong, has grown to new levels in recent months – just yesterday, the 201st cosponsor joined the Email Privacy Act (HR 1852), a bipartisan bill that would amend ECPA to require warrants for digital content.

Despite this wide, bipartisan support, a vote on ECPA reform legislation has been stalled because of the SEC’s push for a special exception that would allow it to access customers’ digital content stored with Internet companies without a warrant. Basically, the SEC, a civil regulatory agency, wants special powers that even law enforcement agencies like the Department of Justice wouldn’t have.

The joint letter this week spells out why this expanded warrantless snooping power for the SEC is unnecessary and troubling.

First, the SEC can already compel individuals to disclose content stored in the cloud the same way it compels individuals to disclose content they store locally, on their own computers. The SEC and other regulatory agencies can do this with a subpoena served on the account holder rather than on the Internet company holding the content. The agencies can go to court to enforce their subpoena against the account holder. Further, agencies can order companies to preserve the contents of accounts so they can’t be deleted while the subpoena is being issued and enforced. This process, used to get content stored locally on a personal computer, should be used to get data stored in the cloud. Why discriminate against the innovation represented by the cloud, which provides so many benefits to users?

Second, as far as anyone can tell—and the SEC has not provided evidence to the contrary, despite repeated requests—in the three years since a Sixth Circuit case known as US v Warshak held that accessing the content of digital communications without a warrant was unconstitutional, neither the SEC nor any other regulatory agency has tried to compel an Internet company to turn over customers’ digital content without a warrant. However, SEC Chair Mary Jo White recently made a confusing claim during her April 1st testimony before the House. Despite previous assurances from the SEC that it was not obtaining content from companies with a subpoena, White said in her testimony that the SEC is, in fact, getting content with a subpoena. The SEC statements are at best contradictory and at worst misleading.

Third, If the SEC were to get this warrantless snooping authority, it would open up the door to grave abuse. For example, if the SEC got digital content with just a subpoena, it could share that content with a law enforcement agency like the Department of Justice in a parallel investigation. This gives criminal agencies a chance to circumvent the warrant process established by the Fourth Amendment.  Also, if the SEC is getting content with just a subpoena (issued without any approval of a judge), what’s to keep other regulatory agencies, like the IRS, from doing the same? We know that in the past the IRS wanted to use a mere subpoena to obtain content from third party service providers. If Congress created a special rule for the SEC, the IRS would almost certainly seek the same.

The SEC’s Due Process Problems

The SEC’s grab for warrantless snooping powers is even more troubling when seen in the context of news stories and commentary in recent weeks detailing the agency’s penchant for overstepping its bounds as a civil regulatory agency. The title of an op-ed about the SEC in The Wall Street Journal this week says it all: “When Regulators Think They’re Prosecutors.” The op-ed states that the SEC “is turning into an enforcer without adequate due process protections.”  Another op-ed in The Wall Street Journal decried the SEC’s skirting of due process principles by not embracing the Brady rule – a rule the government has long followed that requires it to turn over any evidence that shows the accused did not violate the law. And a report in The New York Times last month entitled “A Dragnet at Dewey & LeBoeuf Snares a Minnow” recounts how a junior law firm employee was caught up in a parallel investigation conducted by the SEC and law enforcement .

Right now, the SEC appears to be the lone holdout on ECPA reform. That one agency could hold up important reform to protect the privacy of millions of Americans in order to push for new, expansive warrantless snooping powers that it does not need is ludicrous, especially during this time of heightened concern over digital privacy. The good news is that Congress, which is so often accused of inertia, is moving forward anyways. Over 200 Representatives in the House, both Republicans and Democrats, have signed onto ECPA reform legislation.

Does your Representative support an end to warrantless snooping? Find out here, and if they don’t, tell them the time for reform is now.