Former Official: SEC Violated Federal Law

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A former Securities Exchange Commission (SEC) official has alleged the agency violated Federal law by destroying the records of enforcement cases it had decided not to pursue, according to The Washington Post. The agency allegedly purged records involving major Wall Street firms, including Goldman Sachs, Citigroup, Bank of America and Morgan Stanley. The cases reportedly involved suspicions of “insider trading, financial fraud and market manipulation.”

“The allegations were leveled in a July letter to Sen. Charles E. Grassley (R-Iowa) from Gary J. Aguirre, a former SEC enforcement lawyer now representing a current SEC enforcement lawyer, Darcy Flynn. Flynn last year began managing SEC enforcement records and became concerned that records that were supposed to be preserved under federal law were being purged as a matter of SEC policy, Aguirre wrote,” the article read.

“From 1993 through July 2010, records of about 9,000 preliminary inquiries were destroyed, Aguirre wrote. The inquiries, a first step in the enforcement process, can lead to full-fledged SEC investigations or be dropped without further action.”

According to the article, Grassley has called on the SEC to explain its actions.

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