US financial watchdog deleted embarrassing emails

The US Securities and Exchange Commission (SEC), the US financial watchdog, is in hot water after it has been revealed that it has destroyed data files on high profile inquiries which would have embarrassed Wall Street.

According to ComputerWorld,  amongst the records was an early-stage investigation into convicted Ponzi scheme fraudster Bernard Madoff.

The allegations have been made by a whistleblower, who was a former SEC employee, Darcy Flynn. The US Senate Judiciary Committee has written to SEC chairwoman Mary Schapiro to demand an immediate explanation.

The US SEC was slammed by the judge in the Madoff case for being too sloppy in its computer policing systems.

The regulator has also been heavily criticised for missing numerous warning signs in its investigations, particularly around Madoff.

Senator Chuck Grassley, the senior Republican on the Senate Judiciary committee, said the data that the SEC is alleged to have destroyed were between 1993 and 2010. They also included insider trading problems at at Deutsche Bank, SAC Capital and collapsed bank Lehman Brothers. There were emails into corporate practices during Goldman Sachs’ trading of complex products with insurer AIG.

SEC insists it has a record of investigations where required by law but acknowledges it has deleted a certain amount of case data.