Friday, 19 August 2011

SEC may have destroyed documents

I just wrote about the movie "Inside Job" in this blog: 

"But the big exception is the financial world, for some reason they seem to have escaped scrutiny of the 2008 financial crisis. Does this have to do with the generous donations they have made to both parties in the Congress?"

Now it turns out that the SEC might (also) be involved, see below article. If this is true, it could be very big. I really hope they get to the bottom of this case, all the big names are mentioned: Madoff, Goldman Sachs, CitiGroup, Morgan Stanley, Lehman Brothers.

SEC may have destroyed documents

The Securities and Exchange Commission may have destroyed documents and compromised enforcement cases involving activity at large banks and hedge funds during the height of the financial crisis in 2008, according to allegations made by a lawmaker on Wednesday. 

“From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” said Sen. Chuck Grassley, Republican of Iowa, in a letter to the agency’s chairman, Mary Schapiro. 

Sen. Chuck Grassley: “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.” 

Agency staff “destroyed over 9,000 files” related to preliminary agency investigations, according to a letter sent in July to Grassley, the top Republican on the Senate Judiciary Committee, and obtained by MarketWatch. 

The allegations were made by SEC enforcement attorney, Darcy Flynn, in a letter to Grassley. Flynn is a current employee, and according to the letter, received a bonus for his past year’s work. 

Flynn alleges the SEC destroyed files related to matters being examined in important cases such as Bernard Madoff and a $50 billion Ponzi scheme he operated as well as an investigation involving Goldman Sachs Group Inc.  

Flynn also alleged that the agency destroyed documents and information collected for preliminary investigations at Wells Fargo & Co., Bank of America Corp., Citigroup, Credit Suisse, Deutsche Bank,   Morgan Stanley and the now-bankrupt Lehman Brothers

The letter goes into particular detail about Deutsche Bank, the former employer of current SEC enforcement chief Robert Khuzami as well as former enforcement chiefs Gary Lynch and Richard Walker.

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