SEC Said to Have Destroyed Files on Probes of Banks, Hedge Funds

A Securities and Exchange Commission whistleblower says the regulator destroyed files over the past several years related to inquiries into possible suspicious activities at banks and hedge funds, the Wall Street Journal reports.

SEC lawyer Darcy Flynn says in a letter to Sen. Charles Grassley (R., Iowa) that the organization has destroyed 9,000 files since 1993 regarding securities-law violations at institutions including Goldman Sachs Group, Lehman Brothers Holdings and hedge fund SAC Capital.

Grassley has reached out to SEC Chairman Mary Schapiro, asking her to respond to several questions about Flynn's claims.

"From what I've seen, it looks as if the SEC might have sanctioned some level of case-related document destruction," Grassley says in a statement, the Journal reports. "It doesn't make sense that an agency responsible for investigations would want to get rid of potential evidence."

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