In the latest of many scandals to rock the Securities and Exchange Commission (SEC), a former assistant inspector general is suing the agency claiming that he was fired for reporting wrongdoing, including security breaches and misconduct among top officers.
It’s yet another black eye for the famously inept federal agency charged with policing the nation’s financial industry. Over the last few years the SEC has made headlines for a variety of shameful transgressions, including high-ranking managers spending work hours gawking at pornography web sites on their government computers. Among them were senior officers with lucrative six-figure salaries.
The beleaguered agency has also come under fire for wasting nearly $557 million on luxurious office space it will never use and lying to cover up the wrongdoing. A few years ago the Justice Department investigated two high-ranking SEC enforcement officials—both of them attorneys—for illegal insider trading. In the course of that probe, authorities discovered that the SEC has no compliance system in place to ensure that employees with tremendous amount of nonpublic information don’t engage in insider trading.
Then there was the botched investigation of the largest Ponzi scheme in history. The incompetent SEC investigator who missed Bernie Madoff’s illegal, $50 billion Ponzi scheme actually got a cash bonus for his good work. A scathing SEC Inspector General report exposed this atrocity and outlined how the agency failed miserably to catch Madoff, who defrauded investors out of billions and eventually pleaded guilty to 11 felonies.
The federal lawsuit filed recently in Washington D.C. by the former SEC assistant inspector general, David P. Weber, is related in part to the agency’s scandalous handling of the Madoff case. Weber, an attorney who supervised investigations of fraud, waste and abuse at the watchdog claims in his complaint that the agency retaliated after he reported to Congress and SEC commissioners misconduct by officers and employees. Before joining the SEC Inspector General Weber worked for the Federal Deposit Insurance Corp., the Treasury Department and other financial regulatory agencies.
His lawsuit asserts that the misconduct compromised the integrity of several inspector general investigations, including highly publicized inquiries into the SEC’s handling of the Madoff Ponzi scheme. Weber also disclosed to the commissioners and Congress the existence of severe breaches of SEC and national stock market computer security, according to the complaint. The breaches were caused by intentional or grossly negligent mishandling of sensitive computer equipment and data by SEC employees and management officials, Weber alleges.
Instead of taking action to remedy the “significant failures” SEC officers and employees tried to “cover-up” and “white wash” the “public relations disasters” by discrediting Weber and defaming him in the media, according to the lawsuit. Weber was subsequently placed on a forced administrative leave and was later wrongfully terminated. Additionally, SEC officers and employees physically threatened him and talked openly about wanting to carry a concealed firearm to work.