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Jul 22, 2011

FOIA Friday: SEC Employees Behaving Badly


FOIA FRIDAY

This week's documents:
15 previously unposted reports by the Securities and Exchange Commission's Office of Inspector General  

Document dates:
December 26, 2007 - December 17, 2009

Every Friday, POGO will strive to make one document available that we or others have obtained through the Freedom of Information Act (FOIA), especially documents that have not previously been posted online. Some of these documents will be more important than others, some may only be of historical interest— although relevance is in the eye of the beholder. POGO is doing this to highlight the importance of open government and FOIA throughout the year.
By MICHAEL SMALLBERG

In the months leading up to the 2008 financial meltdown, it appears that some employees at the Securities and Exchange Commission (SEC) were able to make time for a variety of questionable extracurricular activities, as described in a batch of previously unposted investigative reports by the SEC's Office of Inspector General (OIG).

These investigations have been disclosed in the OIG's semiannual reports to Congress, but the original reports are nowhere to be found on the SEC or OIG's websites. POGO has created a resource page with the previously unposted reports obtained by us and others through FOIA, often in a highly redacted form.

The reports we're posting today describe behavior that took place mostly in 2007 and 2008, at a time when financial markets were heading into crisis mode. Here's how some SEC employees decided to pass the time, according to the OIG (parental discretion is advised):

  • During a 21-day period in 2007, a staff accountant at the SEC’s New York Regional Office received approximately 370 denials when she attempted to access pornographic websites. She received another 1,799 denials during a 14-day period in 2008. In addition, a forensic analysis of her laptop uncovered temporary internet files stored on the hard drive containing images showing a wide variety of pornographic situations.

  • During a 30-day period in 2007, a different staff accountant in the New York office received 16,033 access denials for websites that were classified as being pornographic. There were also an astonishing 145,543 instances during this same period when he was able to access websites classified as "Art/Culture," some of which contained “sexually-suggestive and fetish images and a few sexually-explicit images." In addition, a hard drive recovered from his laptop computer contained 904 images that were "similar in nature to those found in the Art/Culture websites recorded in the log." A third employee in the New York office received hundreds of denials over 40 days in 2007 for attempting to access pornographic websites.
  • During a one-month period in 2007, an SEC senior counsel received 2,287 access denials for pornographic websites. He received another 646 denials during a different one-month period later that year. In addition, there were 775 pornographic images recovered from his hard drive.

  • One SEC employee spent part of his time operating a private photography business. He admitted to the OIG that he had saved hundreds of photographs related to his private business on official SEC computers. The OIG also reported that this employee “lacked candor” on several topics during his testimony. A separate investigation uncovered “abundant evidence” that a different SEC employee, a market surveillance specialist, “used the whole gamut of SEC resources for several years to enrich himself at the government’s expense” running a “very successful” private photography business. A third investigation found that a procurement analyst in the SEC’s Office of Administrative Services used SEC resources and official time in support of her non-profit foundation. The OIG found that 1,500 of her emails during the relevant time period were related to her non-profit business.

  • A senior attorney in the SEC’s Chicago Regional Office used agency resources in his representation of witnesses in an investigation being conducted by the City of Chicago Office of Inspector General. The Chicago OIG alleged that this attorney “engaged in unprofessional conduct” during his representation of these witnesses, and “told the Chicago OIG he was a government lawyer, which may have been intended to influence their investigation.”

  • During a nine-month period, a program analyst in the New York office was absent for more than 400 hours without taking leave. In fact, the OIG found there was only day during this entire period when the employee stayed in the office until his scheduled departure time.

 

In other reports provided to POGO by the SEC, the OIG uncovered a program management specialist in the Office of Administrative Services who abused a government parking permit; a staff accountant in the Division of Corporation Finance who misrepresented to colleagues and others that she was a Certified Public Accountant (CPA); an administrative contact who “lacked candor” in his communications with an OIG investigator; and a security guard contractor who was arrested for drunk driving and improperly continued to serve as a Special Police Officer for ten months afterwards, during which he carried a firearm in violation of D.C. Police Department policies.

Most of the OIG's reports were provided to SEC management with a recommendation for disciplinary action. Some employees resigned before the SEC could take any action; others faced discipline ranging from counseling to termination. Several reports were referred to the U.S. Attorney’s Office, which typically declined prosecution.

Click here to see how the SEC responded to these and other OIG investigative reports calling for disciplinary action. The full list of OIG reports obtained through FOIA is available here.

The SEC OIG reports POGO released today are:

 

Michael Smallberg is a POGO Investigator.

Posted at 03:38 PM in Ethics, Financial Oversight, FOIA Fridays, Open Government, Waste |

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