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.