Ex SEC Attorney Blows Whistle on Wall Street Crime Cover-Up

Matt Taibbi has a new article in Rolling Stone detailing the claims of an ex-SEC lawyer who is now blowing the whistle.  Full article here.  Excerpt:

As a federally protected whistle-blower, Flynn is not permitted to speak to
the press. But in evidence he presented to the SEC’s inspector general and three
congressional committees earlier this summer, the 13-year veteran of the agency
paints a startling picture of a federal police force that has effectively been
conquered by the financial criminals it is charged with investigating. In at
least one case, according to Flynn, investigators at the SEC found their desire
to bring a case against an influential bank thwarted by senior officials in the
enforcement division – whose director turned around and accepted a lucrative job
from the very same bank they had been prevented from investigating. In another
case, the agency farmed out its inquiry to a private law firm – one hired by the
company under investigation. The outside firm, unsurprisingly, concluded that no
further investigation of its client was necessary. To complete the bureaucratic
laundering process, Flynn says, the SEC dropped the case and destroyed the
files.

Much has been made in recent months of the government’s glaring failure to
police Wall Street; to date, federal and state prosecutors have yet to put a
single senior Wall Street executive behind bars for any of the many
well-documented crimes related to the financial crisis. Indeed, Flynn’s
accusations dovetail with a recent series of damaging critiques of the SEC made
by reporters, watchdog groups and members of Congress, all of which seem to
indicate that top federal regulators spend more time lunching, schmoozing and
job-interviewing with Wall Street crooks than they do catching them. As one
former SEC staffer describes it, the agency is now filled with so many Wall
Street hotshots from oft-investigated banks that it has been “infected with the
Goldman mindset from within.”

The destruction of records by the SEC, as outlined by Flynn, is something far
more than an administrative accident or bureaucratic fuck-up. It’s a symptom of
the agency’s terminal brain damage. Somewhere along the line, those at the SEC
responsible for policing America’s banks fell and hit their head on a big pile
of Wall Street’s money – a blow from which the agency has never recovered. “From
what I’ve seen, it looks as if the SEC might have sanctioned some level of
case-related document destruction,” says Sen. Chuck Grassley, the ranking
Republican on the Senate Judiciary Committee, whose staff has interviewed Flynn.
“It doesn’t make sense that an agency responsible for investigations would want
to get rid of potential evidence. If these charges are true, the agency needs to
explain why it destroyed documents, how many documents it destroyed over what
time frame and to what extent its actions were consistent with the law.”

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