It seems astonishing, yet it is absolutely true. The Securities and Exchange Commission (the very body that failed to catch Bernie Madoff in his Ponzi scheme) has routinely been destroying documents related to investigations. It’s baffling, it’s frustrating, and ultimately, it’s denying the public what it has a right to know.
Whistleblower Calls SEC Out
As reported by Bloomberg Businessweek, whistleblower Darcy Flynn, once an attorney at the SEC, finally got so tired of the document destruction that he wrote a letter to Sen. Charles Grassley, R-Iowa, the ranking member of the Judiciary Committee about SEC’s activities.
Apparently, the SEC has, for more than seventeen years, “followed a policy of systematically destroying” MUI (matters under investigation) documents, reports Businessweek. This means that it has eliminated files on issues not only related to Madoff’s illegal activities, but matters such as fraud at Bank of America and Wells Fargo, credit-default swap trading by Goldman Sachs, and insider trading activities at SAC Capital Advisors, Deutsch Bank, and Lehman Brothers, among others.
No Cooperation with FOI
Add to this destruction an ongoing lack of cooperation with Freedom of Information requests, and it’s unlikely the truth will ever be learned about many of the illegal activities on Wall Street and beyond. For a regulatory agency, it’s been like the fox guarding the hen house.
This violation of trust, both with its obfuscation and its destruction of potentially indicting material is a slap in the face of democracy and transparency. It is also destroying valuable lessons that, even as they go unpunished (witness the rampant corruption that nearly led to a ruined economy in 2008), also go unlearned. Without access by journalists and historians, the truth about what really happened on Wall Street will never be known, except by those who profited from it.
When the SEC was contacted by a reporter investigating Flynn’s allegations of document destruction, the SEC replied that none of the documents destroyed involved important cases. Still doesn’t the American public, which bailed out Wall Street, deserve to know?
Bottom Line at the SEC
Clearly someone is covering up something for someone. Without the 9,000 or more destroyed documents, the true nature of the dealings on Wall Street and its subsequent impact on the lives of the Americans (whose tax dollars righted the country’s economic balance) will never be entirely known.
Many have called for the total dismantling of the SEC as a result of this finding, added to the near-fatal collapse of the American economy under the SEC’s watch. While that may be an extreme measure, there certainly needs to be a policy of document preservation. Indeed, the destruction of these documents seems counterintuitive to every notion of good governing. The only question now is, “Who’s watching the watchdog?”