BIG WIN: Striking a Blow for Transparency, Oversight, Accountability and the Public’s Right to Know, DC Circuit Court Agrees With Better Markets that Documents Cannot be Filed Under Seal Without Independent Court Review

For a democracy to work, the public must have the ability to see and understand what its government is doing in Congress, the Executive Branch, the courts and the regulatory agencies.  That’s why one of Better Markets’ missions is to stand for and fight for government transparency.  Also, as Justice Brandeis said, “sunlight is the best disinfectant”:  the light of day inhibits many from siding with the special interests and against the public interest. 

The fight for greater transparency and public oversight of the courts and government took a great leap forward this week when the D.C. Circuit Court of Appeals unanimously overturned the District Court in MetLife v. FSOC and directed it to determine independently which portions of the mostly sealed record should be made accessible to the public.

This is a really important decision in a case that is really important to the public.  MetLife’s lawsuit seeking to overturn the Financial Stability Oversight Council’s (“FSOC’s”) designation of it as a systemically significant nonbank threatens to gut key provisions of the Dodd-Frank financial protection law.  In addition to making designation of systemically significant nonbanks much more difficult, if not impossible, the lawsuit could also greatly limit the government’s ability to regulate the shadow banking system, prevent future financial crashes and avoid taxpayer bailouts. 

Having suffered so greatly from the last crash, the public’s interest in this case could not be higher, yet the parties unilaterally and without any judicial or independent oversight filed more than two-thirds of the record under seal.  This secrecy prevented the public from knowing the full basis for FOSC’s and the court’s actions.  This lack of transparency prevents public oversight and accountability of systemically significant financial firms and key financial regulatory agencies. 

That’s why, in 2015, Better Markets intervened in the District Court and moved for an order to show cause why the entire record shouldn’t be reviewed independently by the court for disclosure to the public.  Over MetLife’s opposition, the District Court granted Better Markets’ motion to intervene, but agreed with MetLife and FSOC that the record should remain sealed. 

We appealed and won.  In a 27-page opinion, a three-judge panel of the D.C. Circuit (C.J. Garland, Kavanaugh and Srinivasan) unanimously reversed the District Court.  The court resoundingly affirmed the importance of the public’s right of access to judicial records, which promotes the integrity of the judicial process and enables public oversight.  It also held that regardless of whether the District Court actually cited them in its decision on the merits, the briefs and portions of the record that were intended to influence the court are indeed “judicial records” and are therefore subject to the right of access.  Finally, the Court rejected the argument that the Dodd-Frank Act categorically insulated documents submitted in court that were previously submitted to FSOC from the public’s right of access. 

Now, as originally requested by Better Markets, the district court must conduct a careful balancing test, applying a series of factors to each document or group of documents to determine if there is a valid confidentiality basis to remain under seal.  And it must supply its reasoning, so that the public can know whether any legitimate privacy concerns of the parties have been properly balanced against the public’s right of access.

Meanwhile, MetLife, afraid of losing the case, is trying to kill the appeal on the merits by injecting a legally unrelated political maneuver, which Better Markets is staunchly opposing.  DOJ, purportedly on behalf of its client FSOC, has inexplicably not opposed MetLife, first seeking a 60-day delay via pathetic and embarrassingly bad one-page filing followed by a recent equally embarrassing filing asking for another 30 days.  No self-respecting independent, conflict-free lawyer zealously representing its client (as required by the ethics code) would have filed such papers.  DOJ is representing multiple clients regarding these very issues and clearly FSOC’s best interests are being subordinated to — if not put in the service of — DOJ’s other clients.  That’s wrong and last week Better Markets filed a motion to disqualify the Department of Justice from representing FSOC in the appeal due to these conflicts of interest.

Whistleblower Protections Are Vital to Discovering and Prosecuting Crimes and Protecting the Public

Whistleblowers perform a vital public service by revealing fraudulent and illegal conduct.  As we’ve written prior, the SEC’s whistleblower program (created by the Dodd-Frank Act) has been hugely successful and awarded over $100 million to these public servants. 

That is why the shocking revelations that the CEO of Barclays, Jes Staley, tried to uncover a whistleblower are so troubling and why multiple UK regulators are now investigating the matter.  The Financial Times aptly summed up the stakes involved in a recent piece that asked, “Will whistleblowers pay the price of Barclays case?”  However, the conduct of the CEO here raises deeper issues, as our London-based Senior Fellow, Robert Jenkins, pointed out in a letter to the Editor of the Financial Times entitled “Why the Barclays Chief should go”:

The Chief Executive of Barclays Bank attempted to uncover the identity of a whistleblower – in contravention of the rules both at Barclays and its regulator. CEO Jes Staley has apologized. He will earn fewer millions. But he remains in place. Your article (Will Whistleblowers pay the price of Barclays Case? FT 28 July, 2017) explores how this episode might undermine the effectiveness of whistleblower policies more generally. 

But there is a broader question at stake – the responsibility of both the CEO and the Board to set the right example. For nearly a decade we have witnessed a litany of failure and scandal committed by the leading names in finance. The public was the victim. Underlings took the wrap. Shareholders paid the fines. But when it came to the towering talent at the top, the recklessness was rewarded and the scandals went unpunished. In the aftermath, every banking board has insisted it was applying the lessons learned. New standards of behaviour were needed. Culture was critical. The tone at the top had changed. Has it?

I have no doubt that Mr Staley is an experienced and competent executive. But competence is not enough. To set the right tone the CEO and the Board must know and be seen by the public to know – the difference between right and wrong. And on occasion they must have the courage to demonstrate through their actions that their words are not empty. The more painful the action the more meaningful it will be. Of all the scandal ridden banks Barclays has struggled more than most to put the past behind it. This is an opportunity to do so. 

Leaders are not paid handsomely because they sit at the top. They are (or should) be paid handsomely because they set the direction and example for everyone below. For the good of Barclays and the industry to which it belongs, the CEO should go.

Fighting on Social Media for CFPB’s Rule Creating the Right for Ripped Off Consumers to Join Together to Fight Wall Street Rather than Being Forced Alone into Unfair Arbitration Proceedings

Fighting for consumers’ right to have their day in court and band together in a class action when they are ripped off, Better Markets took to social media to advocate for, and sharing information on, the Consumer Financial Protection Bureau’s (CFPB) newly created arbitration rule. Across our social media channels (with primary focus on Twitter), Better Markets focused on what the rule is, why the rule is needed (with real world & recent examples) and why the rule is good for consumers.

Over the course of the day, we put out over 20 tweets (which were seen by thousands of people and organizations). Our effort included custom made graphics, videos and fact sheets. We received interactions & shoutouts from various nonprofits and offices on Capitol Hill (including Center for American Progress & Rep. Maxine Waters).  Throughout the course of the day we also shared a number of victories the CFPB has had on behalf of Main Street consumers in the six years it has been in operation, including returning more than $12 billion to 29 million ripped off consumers and handling more than 1.2 million complaints.

Supplementing Better Markets’ actions, Senator Elizabeth Warren (MA), Democratic Leader Nancy Pelosi (CA) and Ranking Member of the House Finance Committee Maxine Waters (CA), held a press conference to express their concerns about the effort underway to repeal the CFPB’s arbitration rule. Better Markets shared their concerns on our social media platforms as well.