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Project on Government Oversight

SEC Failing to Hold Employees Accountable for Wrongdoing

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March 9, 2011

The Securities and Exchange Commission (SEC) has moved far too slowly in disciplining its employees and contractors for wrongdoing, and in some cases has ignored recommendations from federal investigators that it fire staff for serious misconduct, the Project On Government Oversight (POGO) said in a letter sent late Tuesday afternoon to SEC Chairman Mary Schapiro.

POGO's letter criticizes the SEC response to investigations performed by the Office of the Inspector General (OIG), and was sent as two subcommittees in the U.S. House of Representatives prepare to hold Thursday hearings on the effectiveness of the SEC's Wall Street oversight.

A POGO review found that of at least 98 SEC employees recommended for disciplinary action since 2008, only 11 were fired or removed from their contract. While many employees received lesser forms of discipline, the SEC took no action whatsoever in the case of 10 employees, many of whom the OIG found to have committed serious offenses.

"It's hard for the public to have faith in the integrity of the SEC when the agency is so reluctant to discipline its employees," POGO Executive Director Danielle Brian said. "Given the agency's history of hiding and dismissing recommendations made by the Inspector General, it's well past time for the SEC show it is serious about holding its employees and contractors accountable for misconduct."

SEC action in the high-profile Madoff and Stanford Ponzi schemes, where SEC employees missed glaring warning signs, is still pending, according to the SEC's recent report to Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee.

Many of the employees involved in the Madoff and Stanford cases have already left the SEC for high-paying jobs in the private sector. But POGO's letter says it's surprising that no action has yet to be taken against the employees who remain.

POGO's letter recommends that the SEC commit to implementing the OIG disciplinary recommendations in a timely fashion and publicly release and post OIG investigations to the Internet, especially those that have already been released through the Freedom of Information Act.

For more information, read:

POGO's letter to SEC Chairman Mary Schapiro, March 8, 2011.

Table on SEC disciplinary actions

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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