National Archives Shreds SEC Over Records Trashing Allegations
The National Archives and Records Administration is lambasting the Securities and Exchange Commission for allegedly destroying digital records, amid reports that the agency deleted thousands of files on financial institutions under scrutiny.
SEC had not forged an agreement with NARA on a timetable for deleting this information, so, under federal records laws, "because a NARA-approved disposition schedule did not exist for these records, the SEC did not have authority to dispose of them," the National Archives said in a statement Thursday afternoon.
In July 2010, after learning of alleged shredding that occurred for well over a decade at SEC, NARA worked with the regulatory agency to stop the unlawful destruction of so-called Matters Under Inquiry files, officials said. "NARA remains concerned that the SEC has been slow in creating records schedules for review and approval by the Archivist of the United States that will ultimately determine how long these MUI records need to be retained," the statement continued.
On Wednesday, Rolling Stone reported that a whistleblower employee at SEC claims the agency's practice was to destroy records of preliminary investigations once they were shut.
Many of the Wall Street players then facing inquiries would go on to help undermine the U.S. economy, according to the publication, citing two scrubbed MUIs involving Ponzi schemester Bernie Madoff, a 2002 inquiry into fraud at the now-defunct Lehman Brothers, and a 2005 case of insider trading there.
"With a few strokes of the keyboard, the evidence gathered during thousands of investigations -- '18,000 . . . including Madoff,' as one high-ranking SEC official put it during a panicked meeting about the destruction -- has apparently disappeared forever into the wormhole of history," Rolling Stone's Matt Taibbi wrote. "A 2009 preliminary investigation of insider trading by Goldman Sachs was deleted, along with records for at least three cases involving the infamous hedge fund SAC Capital."