SEC records in WTC7
Some of the results of my investigation of the SEC records allegations invlving WTC7.
TESTIMONY OF
HARVEY L. PITT, CHAIRMAN
U.S. SECURITIES AND EXCHANGE COMMISSION
CONCERNING THE STATE OF THE NATION’S FINANCIAL MARKETS
IN THE WAKE OF RECENT TERRORIST ATTACKS
BEFORE THE COMMITTEE ON FINANCIAL SERVICES
UNITED STATES HOUSE OF REPRESENTATIVES
September 26, 2001
"Within two days of the attack, we had retrieved all documents stored electronically and had commenced a review of every single investigation and case currently underway in the office with the twin aims of ensuring that we do not miss any imminent deadlines and of developing a plan for completing our investigations and cases in timely fashion. While our review has not been completed, we are optimistic that we will not lose any significant investigation or case as a result of the loss of our building."
"There also will not be any serious long-term impact on the Commission’s oversight of securities firms located in the New York area. The Commission’s records related to examinations of all securities firms are maintained electronically in a central database, and were unaffected by the tragedy. Electronic copies of examination reports and deficiency letters are maintained off-site for investment advisers, investment companies, broker-dealers and transfer agents. Records relating to open examinations will be reconstructed from records that exist at registrants’ offices and from other sources."
[Unfortunately, I cannot link it as I am a newbie. You can google it using Pitt's name etc. I'm sure].
A CT blogger called "Political Friendster' makes allegations about the impact of the lost records and Brady bonds lost, but has no factual support. The NYT in September 28, 2001 ran a piece on the significance of the lost SEC records which seems to challenge Pitt on some issues. One comment: "What is most at risk, one former S.E.C. official said, is the evidence surrounding the pursuit of the small but determined lawbreakers who work in boiler-room operations or on their own. The companies may no longer be operating, and recovering previous evidence is likely to be virtually impossible." Experts point out that the large cases had back up files, multiple sources and larger staffs involved. They would be less likely to lose continuity or evidence.
The possible impact does not seem to fit well into the CT's "Enron" and big guy theories. Although another CT site alleges: "The SEC has not quantified the number of active cases in which substantial files were destroyed. Reuters news service and the Los Angeles Times published reports estimating them at 3,000 to 4,000. They include the agency's major inquiry into the manner in which investment banks divvied up hot shares of initial public offerings during the high-tech boom. " 911research. I recall that the SEC continued to look into these matters and that some prosecutions resulted.
These assertions about what was lost and its significance were done o a speculative baiss, right after the disaster. By 2002, some cases were obviously affected. The index to documents in a Rite-Aid litigation matter was lost (the original documents all survived). The Motel 6 case settled with major fines, after the SEC got the court to order the defense counsel to asssit in reconsituting records. The Street, September 9, 2002. (online).
That article commented: "SEC officials won't discuss how many cases may have been impacted by the terror attacks, but they claim the lost information was limited to two weeks' worth of data stored on the agency's computers that hadn't yet been backed up. But it's clear from talking to securities lawyers who practice before the SEC that things haven't gone as smoothly as the agency would like the public to believe. "
I personally know in big litigation and investigations all of the documents are copied at least twice (three sets with the original) and then numbered (Bates). They can be scanned into electronic files in the case has the budget. Single copies of records would be rare, except in small cases or brand new investigations. The Rite Aid and Motel 6 stories verify this experience. The SEC also has a rule requiring that email by archived to back-up storage.
There has been no evidence that Enron or any of the major cases have been impacted by the WTC7 records loss. It is difficult to hypothesize how someone could assume that destroying the building and its contents would destroy a government's investigation or lawsuit. Besides normal backup procedures, the retention of copies produced to the SEC by defendants and their lawyers, any regional case would have to have key stuff submitted to SEC HQ in any event.
It seems very unlikely at best tht a motive for WTC7's destruction can be constructed out of this situation. I welcome any comments.
Randy Mott
