CREW Sues SEC for Illegal Document Destruction
Washington, D.C. – Today Citizens for Responsibility and Ethics in Washington (CREW) sued the Securities and Exchange Commission (SEC) and its Chairman, Mary L. Schapiro, for the SEC’s decades-long policy and practice of requiring Enforcement Division staff to destroy early-stage investigative files. The SEC’s unlawful policy has resulted in the destruction of thousands of files, including records concerning the fraudulent activities of Bernard (Bernie) Madoff, financial fraud at Bank of America, and an insider trading investigation of the now defunct Lehman Brothers. Click here to read CREW’s complaint.
“The public deserves to know all the messy details about how these investigations were conducted, and why they were closed at such an early stage without taking any action against the Bernie Madoffs of the world,” said CREW Chief Counsel Anne Weismann. “Armed with that knowledge, we can make the necessary changes to ensure history doesn’t repeat itself.”
By destroying valuable government records without authorization, the SEC and Chairman Schapiro have violated the Federal Records Act. Further, Chairman Schapiro has failed to take any steps to recover the destroyed documents or to initiate enforcement action through the attorney general, as the law requires. As a result, CREW and the public have been deprived of valuable information that would hold the SEC accountable for its actions and shed light on why, for example, the agency failed to take any action for years to prevent Mr. Madoff from perpetrating his massive Ponzi scheme.
News reports also indicate the SEC’s Enforcement Division has destroyed all emails related to closed investigations. This and other emerging evidence suggests the destruction may be even broader.
“This may be only the tip of the iceberg,” said Ms. Weismann. “Until there is a full and complete investigation to discover just how deep this scandal goes, we cannot know if criminal charges also are warranted.”