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Friday, October 21, 2016

Aug. 30 (Bloomberg) — Thanks to Darcy Flynn, a longtime attorney at the Securities and Exchange Commission, we now have all the ammunition we need to do what should have been done years ago: terminate the SEC, with extreme prejudice, and in its place construct a new regulatory watchdog for Wall Street free of obvious conflicts of interest.

Flynn’s courage has almost been lost in all the recent apocalyptic talk of earthquakes and hurricanes, but a few weeks back he did something remarkable. After raising concerns internally at the SEC last year — and getting nowhere — Flynn went public and alleged in a formal whistleblower complaint that for at least 17 years the SEC “followed a policy of systematically destroying documents” related to what are known as Matters Under Investigation, or MUIs, most of which were focused on possibly illicit or illegal behavior at Wall Street firms. MUIs are the first step in investigating a case that may lead to a formal SEC inquiry.

Flynn alleged the MUIs were destroyed after the cases were closed when they should have been retained. He catalogued his complaints in a letter to Senator Charles Grassley, an Iowa Republican and the ranking member of the Senate Judiciary Committee. Grassley wrote to Mary Schapiro, the head of the SEC, asking her to respond to him about Flynn’s allegations by tomorrow. She hasn’t yet done so as of yesterday.

In his letter to Grassley, Flynn alleged that the SEC had destroyed documents related to MUIs involving Bernard Madoff; Goldman Sachs Group Inc.’s trading in the credit-default swaps of insurer American International Group Inc.; “financial fraud” at Wells Fargo & Co. and Bank of America Corp.; and “insider-trading investigations” at Deutsche Bank AG, Lehman Brothers Holdings Inc. and SAC Capital Advisors LP.

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Copyright 2011 The National Memo
  • kurt.lorentzen

    Excellent article, well researched and cohesive. The SEC is one corner of a triangle (SEC, FED, Wall Street) who have systematically worked to pay off politicians, consolidate the wealth amongst themselves, and bankrupt the middle class for their own enrichment. We need to replace the SEC with a non-conflict-of-interest watchdog, abolish the FED and reign-in the world’s true terrorists – the Wall Street moguls who would own each and every one of us.

  • fedupwithcons

    Kurt, I agree with your and William Cohan’s sentiments. Unfortunately, if the new watchdog agency head is an political appointee subjected to Congressional approval, you can be sure that the President and/or Congress will pick someone who will go easy on Wall Street and not enforce the laws vigorously. Witness the Republicans’ promise to repeal the Dodd-Frank Act. What is needed is an independent agency out of reach of the politicians with a guaranteed source of funding and the wherewithal to enforce the laws and prosecute the wrongdoers AND out of the Supreme Court’s reach. Again unfortunately, you will get the politicians complaining about it being unaccountable or unconstitutional and passing laws weakening the agency. I don’t know how we can shield the agency from political pressure.