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Matt Taibbi Thinks It’s “Orwellian” For the Government Not To Keep Records On You Just Because You Haven’t Done Anything Wrong

Today Ladies Home Journal 2001 pie baking champion Matt Taibbi takes a break from bashing Goldman Sachs to bash the SEC in Rolling Stone. Like others, he’s kind of unimpressed by the SEC’s failure to keep track of complaints / referrals / pretty much anything that’s going on. Unlike everyone else, though, he attributes this failure not to incompetence but to a far-reaching cover-up:

But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term “Orwellian,” devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or “Matters Under Inquiry” – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission’s internal website. “After you have closed a MUI that has not become an investigation,” the site advised staffers, “you should dispose of any documents obtained in connection with the MUI.”

Translation: a government agency takes a look at what you’re up to. They conclude you’re doing nothing wrong. And their (formal, publicly announced) policy is to dispose of your file rather than sending it to the National Archives.

So … this doesn’t trouble us that much? Matt Taibbi may actually be right that it breaks the law – he has, on occasion, been right about facts in the world, though it’s often a coincidence. Here he suggests that some SEC staffers were worried about personal criminal liability for not archiving records of preliminary inquiries, which sounds a little far-fetched but possible. And there are some more interesting accusations here – including some suggestive coincidences where SEC enforcement execs squashed investigations and then left for the firms that were being investigated. But we were always under the impression that the trouble with Big Brother was too much all-pervading surveillance, not too little.

Is the SEC Covering Up Wall Street Crimes? [RS]

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17 Responses to “Matt Taibbi Thinks It’s “Orwellian” For the Government Not To Keep Records On You Just Because You Haven’t Done Anything Wrong”

  1. Nails says:

    Best post yet!

  2. Hey Later says:

    Did Chazzy G. just bust a lemon meringue nut all over his visage?

  3. deal_mkr says:

    another post for the memory hole

  4. Dr_Rosenrose says:

    “you should dispose of any documents obtained in connection with the MUI.”
    Taibbi, I'll give you possibly illegal, but are we really going to call this elaborate??

  5. VonSloneker says:

    …this guy again

    -Vampire Squid

  6. guest says:

    I like the picture… kind of a Martha Stewart/Peter North hybrid thing going on

  7. anon says:

    Its not Orwellian. It is just pure corruption.

    Massive logic fail:
    "Translation: a government agency takes a look at what you’re up to. They conclude you’re doing nothing wrong. And their (formal, publicly announced) policy is to dispose of your file rather than sending it to the National Archives."

    Logic Fails:
    1) Lest you forget, the SEC is actually a regulatory body which oversees those which they have investigated. It is their job to investigate and oversee! Its not the NSA reading your text messages!
    2) If they decide not to continue the investigation does not mean that they have concluded that you are doing nothing wrong. I.e. it is not in any way a judgement of innocence or guilt.

  8. Reza says:

    Among the missing 18,000 files, there were 2 on Bernie Madoff, 2 for Lehman Brothers,insider trading by Goldman Sachs, along with at least 3 cases involving the infamous hedge fund SAC Capital.

    Many of these cases were kaiboshed by the director of enforcement. For example "On October 1st of that year, the mystery was solved: Dick Walker was named general counsel of Deutsche Bank. Less than 10 weeks after the SEC shut down its investigation of the bank, the agency's director of enforcement was handed a cushy, high-priced job at Deutsche."

    -from the Taibbi article

  9. Colonel_Ingus says:

    You "quash" investigations, not "squash"

  10. MaggiesFarmboy says:

    Levine,

    I'm under the impression that in your desperate attempts to trash Taibbi, you missed the main point of the article and got key facts wrong. I'll let Felix Salmon explain:

    http://blogs.reuters.com/felix-salmon/2011/08/18/

    And "squashed" investigations? Seriously?

  11. dbdt says:

    Kudos to Bess for staying on this phony.

    I think it's a pretty broad swath of journalism that understands Taibbi to be an aggrandizing, conspiracy-obsessed crank. He's made RS, and himself, some dough, but what an intellectual fleecing of the Left it has been. His privileged, prep-school roots covered up by his faux populist outrage… Sadly it seems that there aren't too many (of us) progressives that actually can see through this guy's bullshit.

    In fairness, I suppose the outrage is real, but I suspect it's as much about his daddy as it is about the conspiracies & villans he conjures from the ether.

  12. Kunst says:

    Shame on you, Matt Levine. What a piece of trash. I hope you were paid well.

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