Earlier today you may have seen James Kidney lambaste the SEC as he retired from the agency. Pam Martins cites a few other SEC prosecutors who accused the agency of not doing its job properly.
In 2006, Gary Aguirre, a former SEC attorney, testified before the U.S. Senate on the Judiciary. He wanted to subpoena John Mack, the powerful former official of Morgan Stanley, to take testimony about his potential involvement in insider trading. Aguirre was fired via a phone call while on vacation — just three days after contacting the Office of Special Counsel to discuss the filing of a complaint about the SEC’s protection of Mack.
In 2011, Darcy Flynn, another SEC attorney, told Congressional investigators and the SEC Inspector General that for at least 18 years, the SEC had been shredding documents and emails related to its investigations — documents that it was required under law to keep. The documents could be used at some point as ammunition in legal matters.
Also in 2011 a whistleblower alleged that:
“…just before the staff’s recommendation was presented to the Commission, Enforcement Director Robert Khuzami had a ‘secret conversation’ with his ‘good friend’ and former colleague, a prominent defense counsel representing Citigroup, during which Khuzami agreed to drop the contested fraud charges against the second individual. The complaint further alleged that the Enforcement staff were ‘forced to drop the fraud charges that were part of the settlement with the other individual,’ and that both individuals were also represented by Khuzami’s friends and former colleagues, creating the appearance that Khuzami’s decision was ‘made as a special favor to them and perhaps to protect a Wall Street firm for political reasons.’
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