The Securities and Exchange Commission (SEC) is supposed to be the cop patrolling the Wall Street beat. But according to a new article in Rolling Stone, the SEC has been acting more like an accomplice than a regulator.
The SEC allegedly destroyed the files of some 18,000 investigations, thus whitewashing the records of countless financial firms and Wall Street players - some of whom played a key role in the financial collapse of 2008.
Some of the destroyed files included a 2002 inquiry into financial fraud at Lehman Brothers, a 2009 preliminary investigation of insider trading by Goldman Sachs Group Inc. (NYSE: GS), and information pertaining to the Bernie Madoff case, according to Rolling Stone.
The discovery was illuminated by Darcy Flynn, an SEC attorney-turned-whistleblower, who recently came forward to Congress.
The practice of systematically destroying past inquiries into insider trading, fraud and market manipulation is incomprehensible at best and, at worst, illegal.
Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records were supposed to be maintained for at least 25 years.
But that's not all.
Flynn is not permitted to speak to the press, but apparently presented evidence to the SEC's inspector general and three congressional committees earlier this summer that suggests high-ranking officials at the SEC are merely the puppets of Wall Street firms.
In one case, a senior official in the enforcement division of the SEC kept investigators from bringing a case against an influential bank. That same senior official then turned around and accepted a lucrative job at that bank.
In all, Flynn's report and the Rolling Stone article suggest that while many had just presumed the SEC to be inept, the agency is, in fact, corrupt.
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