As you may have heard, last month’s financial reform legislation gave the SEC more discretion to withhold information in response to subpoenas and Freedom of Information Act requests.

But an SEC administrative law judge ruled Tuesday that the agency can’t apply that discretion – derived from a controversial section of the Dodd Frank Act called Section 929I — in cases that were open before the new financial rules took effect July 22.

The case at hand doesn’t involve a FOIA request, and Congress is already promising to fix the FOIA mess. The ruling could nonetheless hand a new weapon to those trying to prod the SEC toward greater transparency following its failings in the Madoff and Stanford cases, among others.

“If I were representing requesters of information under FOIA, I would bring up this ruling,” said Scott Hodes, a lawyer in Washington who writes about government secrecy at his FOIA Blog. “The burden would be back on the SEC to prove it doesn’t apply.”

Tuesday’s ruling came in the SEC’s suit against Memphis-Tenn.-based broker-dealer Morgan Keegan and two of its top employees, James Kelsoe and Joseph Wheeler. The SEC said in April the firm and the executives recklessly published misleading information about funds that invested in subprime mortgages.

The schedule of the proceedings prompts the defendants to file written testimony by next Tuesday, for a trial scheduled in September. In June, the defendants subpoenaed the SEC’s office of compliance inspections and examinations, seeking their examination records dating back to 2000.

The SEC moved to quash the subpoena, but “for reasons never explained” didn’t file to delay its obligation to comply with it, SEC administrative law judge James T. Kelly wrote in his ruling Tuesday. Administrative law judges adjudicate proceedings to “ensure fairness in administrative proceedings before Federal Government agencies.”

Last month, just days before the Dodd Frank Act took effect, Kelly denied in part the SEC’s motion to quash the subpoena. A week later, the SEC asked him to reconsider.

But Kelly said the SEC motion “fails to address the threshold question of whether Section 9291 should be construed to apply prospectively or retroactively.” He said the language of the Dodd Frank Act makes clear that the rule can apply only prospectively, to cases arising after the enactment date.

Skeptics question the SEC’s decision to press its expanded secrecy powers in a case that has no apparent ties to the financial reform bill.

The SEC has said it needs the additional exemptions provided in section 929I for the sake of conducting confidential examinations of financial firms that it will oversee under the new regulations.

But the SEC has been examining Morgan Keegan for years. So why invoke the new rules for existing powers?

“The actions described here are inconsistent with the public statements the SEC has made,” said Anne Weismann, chief counsel at the nonprofit Citizens for Responsibility and Ethics in Washington. She called the decision to invoke Dodd Frank in a case that has nothing to do with the agency’s new powers “troubling.”

But an SEC spokesman said the decision to assert the Dodd Frank powers came before SEC Chairman Mary Schapiro committed last week to a full scale review of the SEC’s disclosure policies.

“The staff argument in question was made in an internal administrative proceeding prior to the Chairman’s call for the Commission to issue guidance on the use of the provision,” the spokesman said. “As we develop and make public Commission guidance, we will review closely the Administrative Law Judge’s analysis.”

Whatever happens with the secrecy laws, the Morgan Keegan case will continue.

“We weren’t surprised at the ruling on the retroactivity,” said Peter Anderson, a lawyer at Sutherland Asbill & Brennan who represents the defendants in the Morgan Keegan case. “We’re headed to trial.”

Update 7:55: Added comment from the SEC.