SEC Staffers Watched Porn as System Crashed
Senior staffers at the Securities and Exchange Commission spent hours surfing pornographic websites on government-issued computers while they were being paid to police the financial system, an agency watchdog says.
The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC.
The SEC's inspector general conducted 33 probes of employees looking at explicit images in the past five years, according to a memo obtained by The Associated Press.
The memo says 31 of those probes occurred in the 2 1/2 years since the financial system teetered and nearly crashed.
The staffers' behavior violated government-wide ethics rules, it says.
It was written by SEC Inspector General David Kotz in response to a request from Sen. Charles Grassley, R-Iowa.
The memo was first reported Thursday evening by ABC News. It summarizes past inspector general probes and reports some shocking findings:
- A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.
- An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "Pornography." Yet he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense, and received a 14-day suspension.
- Seventeen of the employees were "at a senior level," earning salaries of up to $222,418.
- The number of cases jumped from two in 2007 to 16 in 2008. The cracks in the financial system emerged in mid-2007 and spread into full-blown panic by the fall of 2008.
California Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, said it was "disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation's economy on the brink of collapse."
He said in a statement that SEC officials "were preoccupied with other distractions" when they should have been overseeing the growing problems in the financial system.
An SEC spokesman declined to comment Thursday night.
About 16 percent of men with Internet access at work admit to looking at online porn while at the office, according to a 2006 survey by Websense Inc.
Former SEC spokesman Michael Robinson said he shares the public's outrage about SEC staffers who enjoyed porn on the taxpayer dime when they were supposed to be keeping the markets safe.
"That kind of behavior is just intolerable and atrocious," said Robinson, now with Levick Strategic Communications. He said he expects SEC Chairman Mary Schapiro and her team are "very focused on" the issue.
Schapiro has had other worries in recent days. She has been parrying Republican attacks after announcing civil fraud charges Friday against Wall Street powerhouse Goldman Sachs Group Inc.
Agency officials had hoped the charges would mark a new era of tougher oversight of Wall Street. They followed high-profile embarrassments including the failure to catch Ponzi kings Bernard Madoff and R. Allen Stanford.
But soon after Goldman charges were filed, Republicans began questioning the timing of the announcement. The news came as the Senate prepared to take up a sweeping overhaul of the rules governing banks and other financial companies.
Republican lawmakers also accused the SEC of being influenced by politics. The SEC's commissioners approved the Goldman charges on a rare 3-2 vote. The two who objected were Republicans.
Schapiro is a registered independent who has been appointed by presidents of both parties.2. Greece declares the first level of a default by asking officially to be bailed out - which is not good as markets will try to make it sound. No one left to bailout anybody else since all are basically bankrupt of the big boys. Even Germany has reached officially 73% debt to GDP ratio and they are hiding big chunks as well. Italy is at 115% and has no chance to recover. They can keep the system alive for some time with printing money and hiding fractions but basically its doomed to fail - only a matter of time. This Goldilock propaganda trash talk but G/ or 20 leaders is just destraction or stupid ignorance.
Greece Asks for EU/IMF Aid to Be Activated
Greece asked for the joint European Union/International Monetary Fund aid package Friday, seeking to calm market fears that it will default on its debt.
Scott E. Barbour | Getty Images
"It is imperative that we ask for the activation of the mechanism," Papandreou said while visiting the remote Aegean island of Kastellorizo, according to Reuters.
The cost of Greek credit default swaps fell below 600 basis points after reports that Greece was likely to ask for aid. European stocks also rose.
The Balkan country is holding talks with officials from the EU and the IMF about the terms of the bailout, which could be as high as 45 billion euros ($60 billion).
The first tranche of the funds is expected to arrive before the maturity, on May 19, of a 8 billion euros 10-year bond which spooked the markets because investors were worried Greece would not be able to pay.
"We expect to have funds from the mechanism before May 19," Papaconstantinou said, quoted by Reuters.
On Thursday, Eurostat, the EU's statistics office, revised Greece's budget deficit sharply higher, sending shockwaves through the markets, while Moody's downgraded the country's credit rating, although still kept it at investment grade.