The Securities and Exchange Commission has been asked to respond to allegations that it destroyed documents relating to thousands of investigations.
Darcy Flynn, a 13-year veteran of the SEC, wrote to Sen. Charles Grassley, R-Iowa, claiming that the SEC staff has destroyed more than 9,000 files relating to matters under investigation in cases such as the investigation of Bernard Madoff and Goldman Sachs. Grassley has written a letter to SEC Chair Mary Schapiro asking her to investigate the matter.
“From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” Grassley said in a statement. “It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what timeframe, and to what extent its actions were consistent with the law.”
Grassley’s inquiry to the SEC came after Flynn, an agency whistleblower sent a letter to Grassley describing “the SEC’s unlawful destruction of the federal records generated in at least 9,000 informal investigations.” The documents are said to support “matters under inquiry,” the first step in investigating a case that may or may not lead to a formal investigation.
After reviewing the letter, along with supporting documents, Grassley wrote to Schapiro, asking for a full accounting of any document destruction policies, including whether the allegations are correct that the SEC destroyed documents related to Madoff, Goldman Sachs, Wells Fargo, Bank of America, Deutsche Bank, Lehman Brothers, and SAC Capital.
“If [the whistleblower’s] allegations are correct, the intentional destruction of at least 9,000 MUIs would appear to greatly handicap the SEC’s ability to create patterns in complex cases and calls into question the SEC’s ability to properly retain and catalog documents,” Grassley wrote.
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