When the Securities and Exchange Commission was accused last year of improperly destroying records, in particular those related to certain initial inquiries into possible wrongdoing, the agency responded with a reassuring letter.

In a response to the National Archives, which oversees the preservation of federal records, the SEC said its enforcement division was “not aware of any specific instances” in which it destroyed records of cases that it deemed unworthy of full-blown investigation.

But earlier, unsent drafts of the SEC’s Aug. 27, 2010, letter told a different story about the handling of records, which has come under investigation by the SEC’s inspector general.

One draft, for instance, said that the SEC staff “would typically destroy any documents” in such files “upon closing the matter.”

Early drafts of the letter also said that the files in question fell under a 1997 government “retention schedule” that required records of preliminary investigations to be kept for at least 25 years.

The SEC has not publicly acknowledged that the records were subject to the requirement.

Several SEC officials involved in drafting the letter did not return calls for comment.

SEC spokesman John Nester said, “Agency staff are not going to be discussing this, because we have a review underway.”

In addition to the SEC’s review, the agency’s inspector general is examining both the SEC’s handling of the records and its response to the National Archives, according to a person familiar with the matter who spoke on the condition of anonymity because it is confidential.

An internal whistleblower has alleged that for 17 years the SEC routinely purged certain investigative records in violation of federal law.

An attorney for the whistleblower said in a recent letter to Sen. Charles E. Grassley (R-Iowa) that those records could have shed light on inquiries the agency dropped involving major Wall Street firms such as Goldman Sachs, Deutsche Bank, Lehman Brothers, Citigroup, Morgan Stanley, Wells Fargo and Bank of America.

The lawyer, former SEC official Gary Aguirre, wrote that purging the files would make it easier for SEC officials to avoid accountability while letting Wall Street off the hook.

The whistleblower, SEC lawyer Darcy Flynn, last year contacted the National Archives, which demanded an explanation from the SEC.

Flynn’s attorney wrote to Grassley in July, saying he was concerned that Flynn could become a target of SEC retaliation. Grassley, who has a history of probing the SEC and encouraging whistleblowing, made the allegations public last month.

“The more you see, the more you wonder what’s really going on inside the SEC,” Grassley said in a statement Friday. He added: “The public deserves a complete accounting of this watchdog’s policies and practices.”

The SEC proceedings at issue are known as MUIs, or “matters under inquiry,” an early stage in the enforcement process. The SEC has confirmed that for years it directed its enforcement staff to dispose of any documents obtained in connection with an MUI if the agency closed the inquiry without a full-fledged investigation.

A central question is whether the SEC directive clashed with government record-keeping requirements spelled out for the agency.

The long-standing retention schedule approved by the National Archives and Records Administration (NARA) said the SEC was required to keep records of “preliminary investigations” for 25 years.

A draft of the SEC’s August 2010 letter said that MUIs were covered by the retention requirement. The draft put it this way: “Because ‘MUI’ is simply another term for a preliminary investigation, any MUI records have been subject to the document retention schedules approved by NARA.”

This language, however, was not included in the letter that was ultimately sent to the National Archives.

In an Aug. 26, 2010, e-mail to colleagues, SEC official Barry D. Walters, who heads the office responsible for managing records and fielding public requests for documents under the Freedom of Information Act, had suggested that the language in the draft be removed.

“We think [another] paragraph provides the substance of what they want, and that you could completely eliminate the paragraph beginning with ‘Because MUI is simply another term’ and the numbered paragraphs that follow,” Walters wrote.

If an agency has been explicitly ordered to preserve certain records, such as files of preliminary investigations, then dumping them would be illegal. But even if the National Archives has not approved a timetable for the purging of particular records, government agencies must preserve them — until the National Archives has declared whether and when they may be destroyed.

The National Archives has implied that MUIs were different from preliminary investigations. So it has also suggested that the SEC, if it destroyed the records, took the latter, potentially less problematic action. “Because
a NARA-approved disposition schedule did not exist for these records, the SEC did not have authority to dispose of them,” the National Archives said in a statement last month.

In his letter to Grassley, Aguir­re wrote that SEC officials had been worried that telling NARA the truth about the destroyed files “could involve criminal liability for senior SEC officials.”

In an Aug. 23, 2010, meeting, one official asked if there had been any related prosecutions. Aguirre wrote, “Barry said this is serious, could lead to crim. liab.,” quoting Flynn’s contemporaneous notes of the meeting.

Walters did not return a call, and Nester said Walters declined to comment.Early drafts of the letter the SEC ultimately sent on Aug. 27, 2010, included an argument why it was permissible to discard some documents. Although MUIs fell under the record-keeping schedule, “only certain categories of documents” in those files “are considered the official records of an investigation and are thus subject to the twenty-five year retention requirement,” a draft said. What’s more, the files would “not normally include documents subject to long-term retention.”

In an interview, a National Archives official, Laurence Brewer, expressed skepticism about that argument.

Other than duplicate documents and the like, he said, “offhand, I can’t think of anything that would be disposable.”