SEC May Have Been Hiding Big Wall Street Crimes

Taibbi: "Orwellian" SEC May Have Been Hiding Big Wall Street Crimes

It's tragic and frightening in implication when the checks and balances, alert systems and safety nets designed to protect consumers and taxpayers end up instead protecting those who would do them harm.

Here's an explosive report from Rolling Stone's intrepid Matt Taibbi on the potential that the Securities and Exchange Committee has been committing exactly that kind of wrongdoing--and it's based on congressional evidence presented by a whistleblower. Emphases are mine:

..For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – $8,000 ... "including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – have apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records – "including case files relating to preliminary investigations" – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term "Orwellian," devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation...

This destruction of records as outlined by the whistleblower, Darcy Flynn, an SEC attorney points to, in Taibbi's words, "a federal police force that has effectively been conquered by the financial criminals it is charged with investigating."

Scary and important stuff.

The article is online and can also be found in the most recent issue of Rolling Stone magazine (the Red Hot Chili Peppers are on the cover).

By Sarah Seltzer | Sourced from AlterNet

Posted at August 17, 2011, 9:24 am