http://online.wsj.com/article/SB100...68772.html?mod=WSJ_hp_LEFTWhatsNewsCollection .................... By JENNY STRASBURG (Wall Street Journal) The federal government's archives agency said Thursday that the Securities and Exchange Commission improperly destroyed documents related to enforcement inquiries, and the regulator has been "slow" in following guidelines for what records must be retained. The SEC "did not have authority to dispose of them per the Federal Records Act," the National Archives and Records Administration said Thursday in a statement, referring to files connected with SEC "matters under inquiry," or MUIs. These are the agency's preliminary looks into potential violations of securities laws. "While the National Archives is satisfied that the destruction has stopped, NARA remains concerned that the SEC has been slow in creating records schedules for review and approval," the agency said. An SEC spokesman said Thursday, "We maintain records of our inquiries and they are available to investigators across the agency. As NARA notes, it works with federal agencies on a regular basis to resolve allegations and we are committed to that process." On Wednesday, the SEC said the document destruction wasn't illegal. The regulator was responding to accusations from an SEC attorney that the agency had improperly destroyed at least 9,000 documents relating to inquiries of Wall Street banks and hedge funds. That SEC lawyer, Darcy Flynn, in a whistleblower complaint portrayed the SEC's systematic deleting of files as unlawful, saying it hurt the agency's ability to police wrongdoing in the markets and catch bad behavior within the agency itself. The accusations were made public Wednesday by Sen. Charles E. Grassley's office, who asked the SEC by the end of this month to explain its document-retention policies and their effect on investigations. A national archives spokeswoman Thursday said the archives agency has the option of referring the matter to prosecutors, either before or after the SEC's Inspector General completes a report expected next month. Paul Wester Jr., chief records officer for the U.S. government, said in an interview Thursday it is "too early" to say whether the national archives will take further action. Mr. Wester told the SEC in an Aug. 1 letter that the archives agency's "unauthorized disposal case" with the SEC will remain open until the regulator has an approved "records control schedule." At issue is whether MUIs should be designated part of preliminary investigations, or something else. In the case of formal investigations, the SEC is required to maintain files for 25 years. Mr. Flynn argued in his complaint that the 25-year requirement applies to MUI files, but has been disregarded by the SEC. On Thursday his lawyer, Gary J. Aguirre, said, "NARA appears to have concluded that there's been an unlawful destruction of these records by the SEC." Mr. Aguirre is himself a former SEC staff member who aided Sen. Grassley's questioning in 2009 about a years-long SEC insider-trading investigation. Mr. Grassley's office said Thursday that the national archives statement underscores the need for the SEC to answer questions about its policies, and for "the inspector general to provide an independent assessment of the damage done."