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Thanks to Whistle-blowing, a Positive Step for the Wall Street Watchdog
There was a positive development this week in the cause of law enforcement record-keeping and good government.
The Securities and Exchange Commission directed staff to stop destroying preliminary investigative documents until further notice. The move was definitive but not surprising. It came after the public learned the agency responsible for protecting investors was destroying thousands of documents related to preliminary investigations of suspicious activity on Wall Street.
The story unfolded through a courageous agency whistleblower who came to my office with his concerns. As I helped to get his story out and details emerged, one fact became clear: The Securities and Exchange Commission was anything but clear on what documents it needed to preserve, both for the logical purposes of maintaining case files for future enforcement and what’s required under federal law.
Federal agencies – from the Securities and Exchange Commission to the United States Senate – are required to archive records related to official business. The nation’s history is documented that way. J. Edgar Hoover’s scrapbooks and President Reagan’s speeches are on file. Enforcement agencies’ investigative files are just as much a part of the public record, even if they need to be archived for a shorter period of time than documents of historic value.
The Securities and Exchange Commission is supposed to work out a plan with the National Archives and Records Administration over precisely what documents have to be archived. If an agency investigator receives a tip about potential insider trading, is a record of that information being preserved?
Should the record be preserved out of sound investigative strategy? Anecdotally, at least some law enforcement officers will tell you they keep everything. A radio piece this week described how agents at the Mall of America keep suspicious activity reports for decades, even though the vast majority of the cases turn out to be something as minor as someone forgetting his cell phone in the food court.
Should the record be preserved to keep the agency honest? The Securities and Exchange Commission is plagued with allegations that its revolving door between its staff and Wall Street compromises investigations. In one situation I investigated, the agency bowed to political connections and bypassed an investigation into insider trading because of the political clout of those involved. Keeping records helps inoculate the agency against the ill effects of compromised ethics and biases.
Does the record have to be archived under federal law? After the scrutiny and exposure of recent weeks, the agency and the National Archives appear to be having a renewed conversation on this key question. I’ll continue watching to see that the discussion is resolved in a definitive way for the good of the agency and anyone with a retirement plan or a mortgage tied to Wall Street who needs the Securities and Exchange Commission to do its job.
September 9, 2011
There was a positive development this week in the cause of law enforcement record-keeping and good government.
The Securities and Exchange Commission directed staff to stop destroying preliminary investigative documents until further notice. The move was definitive but not surprising. It came after the public learned the agency responsible for protecting investors was destroying thousands of documents related to preliminary investigations of suspicious activity on Wall Street.
The story unfolded through a courageous agency whistleblower who came to my office with his concerns. As I helped to get his story out and details emerged, one fact became clear: The Securities and Exchange Commission was anything but clear on what documents it needed to preserve, both for the logical purposes of maintaining case files for future enforcement and what’s required under federal law.
Federal agencies – from the Securities and Exchange Commission to the United States Senate – are required to archive records related to official business. The nation’s history is documented that way. J. Edgar Hoover’s scrapbooks and President Reagan’s speeches are on file. Enforcement agencies’ investigative files are just as much a part of the public record, even if they need to be archived for a shorter period of time than documents of historic value.
The Securities and Exchange Commission is supposed to work out a plan with the National Archives and Records Administration over precisely what documents have to be archived. If an agency investigator receives a tip about potential insider trading, is a record of that information being preserved?
Should the record be preserved out of sound investigative strategy? Anecdotally, at least some law enforcement officers will tell you they keep everything. A radio piece this week described how agents at the Mall of America keep suspicious activity reports for decades, even though the vast majority of the cases turn out to be something as minor as someone forgetting his cell phone in the food court.
Should the record be preserved to keep the agency honest? The Securities and Exchange Commission is plagued with allegations that its revolving door between its staff and Wall Street compromises investigations. In one situation I investigated, the agency bowed to political connections and bypassed an investigation into insider trading because of the political clout of those involved. Keeping records helps inoculate the agency against the ill effects of compromised ethics and biases.
Does the record have to be archived under federal law? After the scrutiny and exposure of recent weeks, the agency and the National Archives appear to be having a renewed conversation on this key question. I’ll continue watching to see that the discussion is resolved in a definitive way for the good of the agency and anyone with a retirement plan or a mortgage tied to Wall Street who needs the Securities and Exchange Commission to do its job.
September 9, 2011