“Nine years ago, the Securities and Exchange Commission moved into three floors at 7 World Trade Center, where it and its 320 employees sent a clear signal that the nation’s securities cop was very much on the beat,” writes Reed Abelson in today’s New York Times.

“All the employees escaped unharmed on Sept. 11, but the offices were destroyed, as were files containing depositions, trading records and other documents for several hundred cases. They ranged from a sweeping investigation into initial public offerings underwritten by major brokerage firms, like Credit Suisse First Boston, to the commission’s pursuit of what it calls boiler-room operations”

“That’s not all. Informal notes from interviews and jottings on documents or memo pads that helped the S.E.C. build cases were also destroyed — not to mention Rolodexes full of contacts. In a few cases, securities lawyers say, critical pieces of evidence were probably destroyed, too.”

“Exactly how extensive — and permanent — the damage done to policing of the securities markets is remains unclear. Officials say evidence supporting many cases was backed up on a central computer or stored in other locations, like Washington. But many former S.E.C. employees and other securities lawyers say the commission faces an enormous task in reconstructing complex cases.”

“Already strapped for resources, the S.E.C. is likely to have to make hard choices about what cases to pursue, and some — involving small outfits or events that took too many years to prove — may be deemed expendable.”

“The agency is adamant that no crime or infraction will go unpunished. “No one whom we have sued or whose conduct we have been investigating should for a single moment doubt our resolve to continue our pursuit of justice in every such matter,” Harvey L. Pitt, the S.E.C. chairman, told Congress this week.”

“But former S.E.C. lawyers and others paint a different picture. No matter how aggressively the New York staff pursues financial crimes — and few doubt that intention — they say the commission faces a huge task that may blunt its commitment.”