Watchdog Finds S.E.C. Erred in Destroying Records

WASHINGTON (Reuters) — The Securities and Exchange Commission’s internal watchdog has found that regulators should not have destroyed records related to closed preliminary probes, but that the practice did not appear to hamper any investigations.

The report Tuesday by the S.E.C. inspector general, David Kotz, comes in response to a complaint his office received from Darcy Flynn, an agency staff member turned whistleblower who claimed that the S.E.C.’s enforcement division wrongfully destroyed preliminary investigative records over the course of two decades.

Mr. Kotz’s report found that while the S.E.C. should not have destroyed the records in question, there was no evidence of any “improper motive” behind the policy and no investigations were harmed by it.