Breaking News

Man arrested after taking child April 19, 2014

SEC says it likely tossed some info on big banks

WASHINGTON (AP) — The Securities and Exchange Commission has acknowledged that some documents from preliminary investigations of major banks and convicted swindler Bernard Madoff likely were destroyed under a former agency policy.

The SEC’s enforcement chief made the disclosure in a letter Wednesday to Sen. Charles Grassley, R-Iowa. Grassley had asked about allegations by an SEC attorney that the agency illegally destroyed records related to thousands of preliminary probes, including investigations of Bank of America, Goldman Sachs, Wells Fargo and Madoff.

Enforcement Director Robert Khuzami said the agency doesn’t believe any current or future investigations were harmed by the policy, which allowed documents to be discarded in cases that were closed when staffers decided a formal probe wasn’t warranted. A review by the SEC inspector general is under way to determine if any law was violated.

Khuzami said in the letter that the SEC has kept “significant information” related to all the “matters under inquiry,” even under the former policy on records.

“We believe the electronic ... information that we retain allows staff to ‘connect the dots’ between current and closed matters,” Khuzami wrote to Grassley. The electronic information is searchable and allows SEC enforcement staff to identify potential relationships between individuals or entities, and between current and past inquiries, he said.

The information that was in documents that were discarded still may be available from sources inside or outside the SEC, Khuzami said. The agency’s current policy, adopted last year, requires all documents to be retained whether they are part of a preliminary probe that is closed or a formal investigation, Khuzami said. The current policy and practices meet the SEC’s legal obligations, he said.

The agency’s reputation has been battered by its failure to detect the massive Madoff fraud over nearly two decades and by other lapses.

Grassley, a longtime critic of the SEC, has expressed concern that the records destruction may have hurt the agency’s ability to pursue cases.

Comments

Use the comment form below to begin a discussion about this content.

Please review our Policies and Procedures before registering or commenting

News Tribune - comments