Whistleblower Files Lawsuit Alleging Major Corruption And Sexual Misconduct At The SEC

Last week, David Weber, a former chief inspector general for the SEC, filed a lawsuit against former employer.

He alleges that several individuals in the SEC retaliated against him for blowing the whistle on sex and corruption at the agency (h/t Rolling Stone).

Here's the 7 page complaint,

To begin, Weber says that two of his bosses at the Inspector General's office, former Inspector General David Kotz and his successor Noelle Maloney were sleeping together.

Kotz resigned from the SEC in January of this year.

Weber told Congress and SEC Commissioners that this, and other forms of misconduct on the part of Kotz, compromised high-profile SEC investigations into people like convicted Ponzi schemers Bernie Madoff and Allen Stanford.

This gross negligence, alleged Weber, even compromised the SEC's computer systems.

From the complaint:

Instead of fixing these issues, the complaint alleges that the SEC engaged in a campaign to publicly discredit Weber.

Weber alleges that SEC officials planted a false story in the press that he requested to carry a gun at the agency, among other things.

The statements they made trashing his reputation are being used in a custody battle over his kids.

The SEC fired Weber last month.

Now here are some of the more details in this scandal (Warning: This does contain some foul language).

• Kotz wasn't just sleeping with his successor, according to the complaint. He was also sleeping with an attorney on the Stanford case named Gaytri Kachroo. Here's how Weber found out from Noelle Maloney:
  
• Weber reported this misconduct to SEC commissioners a few days later. That's when Maloney started accusing Weber of threatening her safety. She told SEC Chair Mary Schapiro, who then told Weber she did not consider him a security threat. Maloney was demoted, but then started a campaign "attacking Weber's integrity."
• According to the complaint, Maloney had colleagues file false complaints against Weber and made it harder for him to do his work by removing his support staff.
• Maloney's attack culminated on May 3rd, 2012, when she alleged Weber was a "physical threat" and two SEC officials (including security chief William Fagan) signed her complaint knowing it was false. Weber was put on leave.
• SEC personnel allegedly brought laptops with super sensitive information to the Black Hat hacker conference in Las Vegas and were walking around with nametags stating their place of employment. Weber brought this concern to Mary Schapiro the day before he was placed on leave.
• Weber was investigating allegations that Mary Schapiro perjured herself and lied during on-the-record testimony before the House and Senate Oversight Committees. Schapiro was aware of this before he was put on leave. Putting him on leave at all, actually, could spell trouble for her as well.
  

Weber is suing for $20 million in punitive damages (back pay, bonuses, benefits etc.). He also wants his job back (we're not sure why).

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