SEC Punishes Porn-Surfing Employees

WASHINGTON, April 24, 2010— -- All 33 employees cited in an investigation that found Securities and Exchange Commission (SEC) employees surfing pornography at work have been disciplined or are in the process of being disciplined, including some who already have been fired or suspended, the SEC said.

The agency also said it increased penalties for those who use SEC computers to view pornography.

Although the SEC also said it had taken concrete steps to stop employees from surfing porn in the future, it already had firewalls on its computers that were designed to deny access to offensive websites, but the firewalls didn't always work.

Despite the actions announced Friday, the man behind the investigation told ABC News that the SEC was initially slow to deal with the problem.

"In one case I spoke to someone who is a senior-level person, and I said, 'You know you have to fire this individual, they are looking at porn nonstop.' And they said, 'I can't fire them because they are working on a very important investigation,'" SEC Inspector General David Kotz said. "I said, 'There is no way they are working on an investigation because I know what they are doing all day.'"

Lost productivity due to pornography is not unique to the SEC. In fact, some experts suggest it is something of an epidemic in corporate America.

"I could tell you story after story of major corporations, publicly traded companies, household name companies, who have employees who are doing the same thing," said Nancy Flynn, executive director of the E Policy Institute.

One report suggests that among workers who have Internet access via work computers, as many as almost 30 percent visit adult websites.

By that measure, the SEC problem could have been worse. The serious violators revealed in this investigation represent about 1 percent of the total SEC workforce, but more than half of those offenders were senior officials who had far more important things to be doing.

The Securities and Exchange Commission is the sheriff of the financial industry, looking for crimes such as Bernard Madoff's Ponzi scheme, but a new government report obtained by ABC News has concluded that some senior employees spent hours on the agency's computers looking at sites such as naughty.com, skankwire and youporn as the financial crisis was unfolding.