SEC’s Document Purging Wasn’t Authorized, Archives Agency Says

The U.S. Securities and Exchange Commission didn’t have authority to dispose of investigation documents the agency had been routinely purging since 1993, the National Archives and Records Administration said.

NARA, the Washington-based agency that oversees federal record-keeping, opened an investigation last year after an SEC employee claimed the agency was illegally destroying files pertaining to so-called matters under inquiry, NARA said in a statement yesterday. The SEC, which NARA said has since halted the practice, destroyed the documents without approval, according to the statement.

“While the National Archives is satisfied that the destruction has stopped, NARA remains concerned that the SEC has been slow in creating records schedules for review and approval,” NARA said. The inquiry will continue until archives authorities have approved a plan for treating MUI documents, Paul Wester, chief records officer for the U.S., said in a separate Aug. 1 letter to an SEC official.

The allegations originated with Darcy Flynn, a 13-year SEC veteran, who claimed that the SEC illegally purged more than 9,000 documents from initial probes that never became formal investigations. Senator Charles Grassley, an Iowa Republican, this week asked SEC Chairman Mary Schapiro to respond to Flynn’s claims by the end of this month.

“We maintain records of our inquiries and they are available to investigators across the agency,” John Nester, an SEC spokesman, said in a statement. “As NARA notes, it works with federal agencies on a regular basis to resolve allegations and we are committed to that process.”

To contact the reporter on this story: Joshua Gallu in Washington at jgallu@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

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