The Securities and Exchanges Commission has had quite a shellacking over the last week over its ineptitude and turning a blind eye to Bernard Madoff's scam.

An Office of Inspector General (OIG) report reveals there are serious issues inside the SEC. The report details instances of SEC employees trying to access porn websites on SEC computers. "The OIG completed three investigations of employees who misused their government computers to attempt to access and successfully access pornographic website. In the first of these matters, the OIG uncovered evidence that a employee who was still in his probationary period had used his SEC laptop computer to attempt to access Internet websites classified as containing pornography, resulting in hundreds of access denials. The OIG investigation also disclosed that this employee successfully bypassed the Commission's Internet filter by using a flash drive and accessed a significant number of Internet Google images containing pornography while using his SEC computer ... In the second investigated matter, the OIG's examination of logs of an employee's Internet activity revealed that the employee had attempted to access websites classified as containing pornography, resulting in thousands of access denials. Moreover, forensic analysis of the employee's computer hard drive showed hundreds of pornographic images stored on the drive, some of which were of a very graphic nature. The investigation also showed that the employee had succeeded in bypassing the Commission's Internet filter by accessing pornographic materials through Google images. The employee declined to appear for sworn, on-the-record testimony before the OIG, asserting the Fifth Amendment privilege against self-incrimination ... In the third investigation conducted during the reporting period, the OIG found that, during a one-month period, an employee had received numerous access denials for pornographic websites. The investigation also uncovered evidence that the employee had successfully bypassed the Commission's Internet filter, thereby accessing a significant number of pornographic and sexually explicit images, many of a graphic nature."

The OIG also found that SEC staff were not immune to conflicts of interest. In one instance, a senior employee told brokers they were from the SEC when dealing with a family member's account. "The broker indicated that that he felt she was trying to intimidate and bully him and he considered her conduct to be unprofessional."

The OIG also uncovered evidence that SEC were using SEC resources to run their own private businesses. "In one of the matters investigated during this reporting period, the OIG investigation uncovered abundant evidence that an employee repeatedly and flagrantly used Commission resources, including Commission Internet access, e-mail, telephone and printer, in support of his private photography business for several years ... In the second OIG investigation conducted during the reporting period concerning an employee using Commission resources to operate a private photography business, the OIG found evidence that the employee repeatedly used Commission resources and official time in support of his photography business, and maintained over a hundred photographs on his SEC computer. There was substantial evidence that the employee used Commission resources, including Internet access, e-mail, and telephone, during work hours."


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