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SEC destroys evidence against banks and hedge funds, whistleblower alleges

In a heavy dose of irony for the Securities and Exchange Commission, which launched a new whistleblower program this week, one of its own lawyers is calling foul on the agency for allegedly destroying thousands of documents related to investigations that involved suspicious activity at major banks and hedge funds.

Today Sen. Chuck Grassley of Iowa asked the SEC to account for the allegations. “From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” Grassley said.  “It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence.  If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what timeframe, and to what extent its actions were consistent with the law.”

The allegations stem from SEC attorney Darcy Flynn who handled the agency’s records. Flynn, a 13-year veteran of the agency, says the SEC has been destroying records related to SEC investigations including Madoff’s since at least 1993.

Full story: SEC Destroys Evidence Against Banks And Hedge Funds, Whistleblower Alleges – Forbes.