SEC inspector general to investigate employees over information disclosures

3 June 2009

The Securities and Exchange Commission's (SEC) inspector general has said his office will investigate a number of the regulator's employees, including a "top" SEC official, over allegations that they disclosed privileged non-public information.

According to the Dow Jones Newswires (DJN), David Kotz revealed the pending investigations in his semi-annual report to Congress.

One case centers on a complaint that a high-ranking official at the regulator abused their position to disclose non-public information to a "large investment bank", the news service said.

Mr Kotz's office is also investigating two enforcement division lawyers over accusations that they passed confidential information from an internal database to a corrupt federal agent and a short seller later convicted of fraud, racketeering and conspiracy, it added.

In total, Mr Kotz said his office has 19 investigations pending against SEC employees. One is linked to the Bernard Madoff scandal, DJN noted.

In December, Mr Kotz was appointed to head up the regulator's internal investigation into its failure to follow up on "credible and specific" allegations of wrongdoing against Mr Madoff stretching back to 1999.

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