The U.S. Securities and Exchange Commission will issue subpoenas to reporters only after exhausting all other options for obtaining information and informing top agency officials, Chairman Christopher Cox said.
Cox, who rebuked the SEC's enforcement staff in February for issuing subpoenas to journalists without consulting him or other commissioners, released guidelines Wednesday specifying when and how the agency may take that unusual step in the future. The five-member commission approved the policy unanimously, he said.
"We are aiming at avoiding the issuance of subpoenas to members of the media that would impair, in any way, the newsgathering and reporting functions," Cox said at a press conference in Washington.
Cox has emphasized he still fully supports his enforcement staff. The SEC's enforcement division director, Linda Thomsen, joined him at the press conference.
The new policy takes effect immediately and carries the threat of disciplinary action, from reprimand letters to termination, for SEC personnel who flout it, Cox and Thomsen said.
Cox said attempts to subpoena journalists for information in investigations have been, and will remain, "exceptionally rare."
The guidelines are based in part on procedures in place at the U.S. Justice Department. Federal prosecutors must exhaust all alternate means of gaining information before moving to subpoena a journalist, and they must notify the attorney general and the head of the public affairs office.
The SEC guidelines "show evidence of a real effort not only to understand press practices, but press principles, and that's a good sign," said Paul McMasters, ombudsman of the First Amendment Center, a unit of the Freedom Forum, based in Arlington, Va.
McMasters praised the SEC for including the threat of disciplinary action for violating the procedures. More than two dozen reporters faced possible subpoenas in various cases across the government, he said.
"We have not seen this sort of targeting of journalists and their sources for more than 30 years, since the Watergate era," McMasters said.
Cox praised the role of reporters, who, he said, share a "common purpose" with SEC regulators.
"We want to make sure members of the media understand loudly and clearly: We appreciate the work that you do," Cox said. "It is absolutely essential to the work that we do."
The SEC guidelines spell out a step-by-step procedure that must be followed before issuing a subpoena to a reporter.
An SEC investigator must first exhaust other means of obtaining the information, determine that the information is "essential," get approval from a supervisor and then contact the reporter, ideally through his or her lawyer, to negotiate a way to get the information informally.
If those efforts fail, a subpoena could be issued if approved by the director of the enforcement division in consultation with the SEC's general counsel. The SEC chairman would then be notified about the pending subpoena.
Cox on Feb. 27 rebuked the enforcement staff for not consulting him or other commissioners before subpoenaing two Dow Jones & Co. reporters in connection with an investigation. On March 2, Cox ordered the commission to begin work on the guidelines for future investigations that might involve journalists.
The case increased scrutiny of the SEC's enforcement unit, which has been criticized for overreaching by trade groups including the U.S. Chamber of Commerce. Two of Cox's fellow commissioners, Republicans Paul Atkins and Cynthia Glassman, have opposed as too onerous penalties the enforcement division levied against some companies.