DMandPenfold writes "The Securities and Exchange Commission (SEC), the US financial regulator, has been accused of destroying thousands of data files on high profile inquiries including an early-stage investigation into convicted Ponzi scheme fraudster Bernard Madoff. The allegations, raised by former SEC employee Darcy Flynn, have prompted the US Senate Judiciary Committee to write to SEC chairwoman Mary Schapiro to demand an immediate explanation. The SEC exists to set a tough example on corporate governance, and it fines banks heavily for both lax practice and deliberate malpractice. Questions over any involvement it may have in sensitive document destruction are not likely to sit comfortably with some in the industry. The SEC insists it has kept records in accordance with the law on its computer system."