SEC Still Struggling to Stop Its Porn Problem

June 1, 2011 -- The Securities and Exchange Commission still has a porn problem.

A new report from the SEC's inspector general David Kotz details how three employees and a contractor were caught checking out porn at work, the latest string of incidents uncovered by the agency's watchdog.

View the full report.

Kotz only launches investigations after the SEC's security system flags employees for repeated attempts to access porn websites, but as he outlines in his new semi-annual report to Congress, he recently conducted probes into four workers.

In October of last year, Kotz looked into a staff accountant at the agency's Washington headquarters who used his work computer to try to access porn "hundreds of times." The employee successfully managed to get to "numerous sexually-explicit photographs from his SEC computer, including graphic depictions of sexual acts," Kotz found, noting that much of the porn activity occurred during work hours.

The employee initially did not deny that he had used his work computer to access the material, but later declined to testify as part of the inspector general's investigation. The probe culminated in Kotz recommending disciplinary action against the employee, including removal from his job. As of the end of March, SEC management had proposed that the employee be removed.

But the staff accountant wasn't the only one at the SEC looking for porn on the clock.

Two other SEC employees and one contractor for the agency also were the subjects of investigations by Kotz's office. One of the employees – an attorney who works at the agency's headquarters – tried to access porn repeatedly during a two-month period. He was rebuffed by the agency's security system hundreds of times, but in "many instances" he was successful in getting to the sexually-explicit images. The attorney later resigned.

Another attorney at headquarters was also on the prowl for porn at work. He used his work computer to access "inappropriate images of partially or fully nude women," according to Kotz – a total of at least 70 images. The employee refused to testify as part of the investigation. As of the end of March, SEC management had recommended that he be removed from his post.

The contractor, meanwhile, used his SEC computer to check out numerous sexually-explicit images, "including graphic depictions of sexual acts," Kotz found. When confronted by the IG's office, the contractor admitted to accessing the porn. His contract with the SEC was terminated by agency management.

It's not the first time Kotz has uncovered a slew of SEC employees spending their work hours looking at porn.

Back in April of last year, Kotz released a report outlining how employees were checking out websites like naughty.com, skankwire and youporn at the same time as the financial crisis was unfolding – and when Bernie Madoff was swindling investors out of tens of billions of dollars.

The 2010 report, conducted at the request of Sen. Chuck Grassley, R-Iowa, found 31 serious porn offenders at the SEC during a two-and-a-half-year period. While that was only a tiny fraction of the SEC's 3,500 employees, 17 of the alleged porn offenders were senior officers at the agency making up to $222,000 a year. One senior attorney spent up to eight hours a day accessing porn, even filling boxes in his office with CDs and DVDs that contained porn that he had downloaded. Another employee – an accountant – tried to access porn sites a staggering 16,000 times in one month.

Now, as Kotz's new 2011 report shows, the porn problem at the SEC has still not been solved.