The SEC now rejects a FOIA request for missing GameStop FTD data

The SEC has now rejected a FOIA request for missing GameStop FTD data from an investor who posted on Reddit the entire process leading to the decision.

In the realm of finance, transparency is crucial for maintaining trust and accountability.

A recent post by a Reddit user has brought attention to the challenges of obtaining critical market data, specifically regarding the missing Fails-to-Deliver (FTD) data for GameStop Corp. (GME).

This article distills the user’s experience in filing a Freedom of Information Act (FOIA) request with the Securities and Exchange Commission (SEC) and emphasizes the importance of advocating for transparency in financial markets.

The Reddit User’s Inspiration

The user, who shared their experience on the SuperStonk subreddit, was inspired by a previous post highlighting significant gaps in GME’s FTD data, especially around key market events.

This prompted the user to take action and file a formal FOIA request with the SEC in October 2024.

Details of the FOIA Request

The Reddit user submitted their FOIA request targeting several critical dates between May and September 2024, which were significant due to notable events like ATM offerings and margin calls.

Here are the dates they focused on:

• May 24, 2024: The day GameStop completed its first ATM offering, yet FTD data was missing.
• May 30, 2024: Significant trading activity occurred, including blocks trading in the Dark Pool, but FTD data was absent.
• June 11-12, 2024: The second ATM offering took place without reported FTD data.
• July 25, 2024: The day after notable purchases by Roaring Kitty, missing FTD data raised suspicions.
• July 31-August 1, 2024: Corresponded with settlement periods for large purchases, yet FTD data was missing.
• August 15, 2024: Missing FTD data coincided with broader financial concerns.
• August 20-28, 2024: Several trading days showed absent FTD data during a critical margin call cycle.
• September 4-13, 2024: Nearly two weeks of missing data began the same day as GME’s share count.
• September 20-24, 2024: Absence of data followed a major GME transaction declared insolvent.

The user expressed concerns that the missing data suggested possible intentional withholding of crucial market information.

Also Read: GameStop And The Manipulative Practices of Wall Street

The SEC’s Response

In December, the user received a generic denial from the SEC, citing “confidential commercial or financial information” under Exemption 4 of FOIA.

They claimed that releasing the data could cause foreseeable harm.

This is particularly frustrating to the retail community, as the SEC routinely publishes similar FTD data.

The SEC stated:

“This letter responds to your request, dated and received in this office on October 18, 2024, for a copy of GME Fail-to-Deliver data for May 2024 through Sept 2024.

Reference is also made to our response dated October 22, 2024, in which we addressed your request for a fee waiver and expedited processing.

We have determined to withhold the requested information since it contains confidential information that is protected from release under Exemption 4, 5, U.S.C. 552 (b) (4).

Please be advised that we have considered the foreseeable harm standard in preparing this response.

I am the deciding official with regard to this adverse determination.

You have the right to appeal my decision to the SEC’s General Counsel under 5 U.S.C 552 (a) (6), 17 CFR 200.80 (f) (1).

The appeal must be received within ninety (90) calendar days of the date of this adverse decision.

Your appeal must be in writing, clearly marked “Freedom of Information Act Appeal,” and should identify the requested records.

The appeal may include facts and authorities you consider appropriate.”

Filing an Appeal

Frustrated with the SEC’s response, the Reddit user filed an appeal, challenging the broad interpretation of Exemption 4.

Some key arguments made in the appeal included:

• Public Interest: The FTD data is essential for understanding market dynamics and ensuring transparency.
• Foreseeable Harm Standard: The SEC did not adequately explain the potential harm from disclosing the data.
• Partial Disclosure: The SEC overlooked the possibility of releasing non-sensitive portions of the data.
• Historical Precedent: The SEC has previously disclosed similar FTD data, setting a precedent for transparency.

While the user received acknowledgment of their appeal, they awaited a substantive response.

Also Read: Watchdogs Now Detect Systemic Risks From Citadel And Others

A Second FOIA Request

In pursuit of further clarity, the Reddit user submitted a second FOIA request for records related to the processing of their initial request—effectively a “FOIA on a FOIA.”

This second request sought relevant communications from the SEC regarding their denial and aimed to uncover the reasoning behind withholding the information.

Specific requests included:

• Internal Communications: Emails and documentation related to the review and denial of the initial FOIA request.
• Confidential Information Justification: Detailed reasoning for classifying the FTD data as confidential.
• Policies and Guidelines: Copies of internal procedures for applying Exemption 4.

While the outcomes of the user’s requests remain uncertain, their story encourages others to take action and advocate for transparency.

By sharing their experience, they hope to inspire fellow Reddit users and the broader public to submit their own FOIA requests to public institutions like the SEC.

For those considering a FOIA request, the Reddit user emphasizes the importance of approaching it professionally and assertively.

Requests can be submitted via email at foiapa@sec.gov or through the SEC’s online form [here].

Together, we can work towards uncovering the truth about GME and related market activities, fostering greater accountability in our financial systems.

Read Daily Market News for more news and developments like this.

Follow Frank Nez on X for community insights.

🚨JUST IN: The SEC Now Rejects A FOIA Request For Missing GameStop FTD Datahttps://t.co/rlcirzaIhr$GME #GME

— Frank Nez (@FNez_Blogger) December 31, 2024

---