A Prison Service official left the details of sex offenders and violent criminals and their victims on a bus in Brighton.
The sensitive documents were found by a 32-year-old Brighton man who handed them to The Argus newspaper.
The man was arrested on suspicion of theft by finding. He was held for just over two and a half hours by Sussex Police.
He spent most of that time in the cell block just a few hundred yards from the Argus offices in Crowhurst Road, Hollingbury, before being released without charge.
Sussex Police said: “No police action is being taken against him as he had taken early steps to return the documents rather than intending to keep them, choosing to do so and raise his concerns via the media.”
The force said that “the recommended option” would have been to hand the documents directly to the police.
The paperwork contained “information about the cases of several people being managed under the Multi-Agency Public Protection Arrangements (MAPPA)”, Sussex Police said.
According to The Argus, this included details of dangerous offenders with convictions for violence and for sexual offences as well as details of their victims and others deemed to be at risk.
The force said: “Sussex Police and the Surrey and Sussex Probation Trust are taking active steps to ensure the safety of people referred to in the documents and to reassure them that they have been recovered.
“Sussex Police is investigating how the documents came to be mislaid and will be sharing these findings with the Prison Service and other agencies as part of a review by MAPPA partners.”
The loss of the file was reported to Sussex Police at lunchtime on Tuesday (17 July).
It was handed to The Argus shortly after being found.
The same afternoon officers were checking CCTV footage and trying to trace the man who found the file.
Sussex Police said that at 9am or 9.40am yesterday (Wednesday 18 July) officers arrested the man who found the file at an address in Brighton.
Officers contacted The Argus at about 10am and, Sussex Police said, “made immediate arrangements to retrieve the documents which they quickly returned after being asked.”
The force said that the 32-year-old was “in custody from 10.34am to 12.17pm” before being told that he faced no further action.
Sussex Police acknowledged the public interest in the matter being investigated by The Argus.
But it expressed concern that the newspaper did not appear to have contacted or tried to return the file to its owner or hand it in to the police.
Instead taxpayers money was spent as officers were deployed to investigate the matter and vulnerable people named in the documents were contacted.
Sussex Police said: “Extensive investigations led to the man being identified as having picked up the documents.
“At the time of his arrest, it was unknown where the documents were and what his intentions were.
“As there was a potential offence of ‘theft by finding’, police arrested the man so he could be interviewed under caution and so his house could be searched to make sure the documents or copies were not there.
“This process is set in law for the protection of both suspects and the police.
“The man quickly disclosed that he had handed the documents to The Argus newspaper shortly after finding them.
“Police were not aware of this and, after contacting the paper, they quickly returned the documents.
“The first contact between the police and the newspaper on this issue was when we contacted them shortly after 10am on Wednesday to ascertain if they had the documents and to request their return.
“Police fully support the role of the media to scrutinise the actions of public authorities and recognise that reporting the loss of these restricted documents is clearly in the public interest.
“MAPPA partners have been transparent in responding to the concerns raised at the earliest opportunity.
“However, simultaneously there is an obligation for the media to act in the wider public interest and we have expressed our concerns to The Argus that in not contacting us proactively they have undermined this.
“Significant police resource was deployed to investigate the loss for over 18 hours, leading to the arrest of a man who had already handed the documents to them.
“The documents were marked as ‘Restricted’, included prominent MAPPA partner logos and clearly had been mislaid.
“Proactive notification that they were in the hands of the newspaper would have considerably reduced the cost of the police investigation and, more importantly, enabled earlier reassurance to those mentioned in the documents.
“This would not have impacted their position to rightly and simultaneously hold authorities to account for the loss.”
Councillor Ben Duncan, Brighton and Hove City Council’s lead member for community safety and the city’s representative on Sussex Police Authority, said: “Obviously I’ll await the results of Sussex Police’s inquiries into what exactly happened.
“But it does seem as though an individual just trying to do the right thing has been treated in a somewhat heavy-handed way.
“Human rights must be at the heart of the way policing is delivered and no one should ever be arrested unless there is real reason to believe that they are guilty of an offence.”
He said that the arrest could “deter any right-minded citizen from handing in such papers in future”.