Whistle-blower Says SEC Destroyed Files
August 17, 2011 by UPI - United Press International, Inc.
WASHINGTON, Aug. 17 (UPI) — U.S. Sen. Chuck Grassley, R-Iowa, says he’s looking into a whistle-blower’s claims the U.S. Securities and Exchange Commission destroyed evidence.
Grassley sent a letter sent to SEC Chairwoman Mary Schapiro Wednesday saying an SEC attorney, Darcy Flynn, claimed the commission destroyed evidence from preliminary investigations, The Hill reported. The investigations involved some of Wall Street’s biggest firms, and even convicted Ponzi schemer Bernard Madoff.
The destroyed documents also covered events of the U.S. financial crisis, including the trading of AIG credit default swaps by Goldman Sachs as well as insider trading investigations at some banks, the Washington publication said.
Flynn told Grassley if a preliminary SEC inquiry did not merit a full-blown investigation, the SE C’s policy was to destroy the files.
“These records may contain critical information that could be extremely useful in piecing together complex cases, even if not immediately pursued,” Grassley wrote the SEC. “If Mr. Flynn’s allegations are correct, the intentional destruction of at least 9,000 [documents on matters under investigation, or MU Is] would appear to greatly handicap the SE C’s ability to create patterns in complex cases and calls into question the SE C’s ability to properly retain and catalog documents.”
The SEC declined to comment on the letter in advance of an official response to Grassley, but said although it keeps records of its MU Is, but it is not required to keep every document.