File purging not harmful, says SEC official
It is “likely” that the SEC got rid of “some documents” from inquiries it decided not to pursue involving Bernard Madoff and such major financial firms as Goldman Sachs, Bank of America, Lehman Brothers and SAC Capital, a senior SEC official said Wednesday.
But the official, enforcement director Robert Khuzami, said agency officials “do not believe that current or future investigations have been harmed” by the SEC’s long-running practice of purging files of inquiries that were closed without a full-fledged investigation.
Khuzami was responding to a whistleblower’s allegations that the Securities and Exchange Commission routinely destroyed valuable information that could help the agency police Wall Street and help hold the SEC accountable.
If the SEC needed the discarded information, much of it could be gathered again, Khuzami said in a letter to Sen. Charles E. Grassley (R-Iowa). In addition, the SEC’s case tracking systems have preserved some information about the closed files, such as the general subject, the dates the files were opened and closed, the parties involved, and the names of the SEC staff members who participated, he said.
The database is an important source of information for SEC investigators trying to detect patterns, Khuzami wrote.
In a statement, Grassley asked, “How do you know whether you might have been helped by something you no longer have?”