WASHINGTON (CN) - A former assistant inspector general claims the SEC fired and defamed him for reporting misconduct by SEC officers and exposing potential security breaches at the agency.
David P. Weber sued the U.S. Securities and Exchange Commission and SEC Chairwoman Mary Schapiro, in Federal Court.
Schapiro is the only individual defendant.
Weber, who supervised investigations of fraud, waste and abuse, claims the SEC retaliated after he reported misconduct by SEC officers and employees, to SEC commissioners and Congress.
"Mr. Weber brings this action after SEC officers and employees made malicious and defamatory statements against him in the news media, leaking personal information about him in violation of the Privacy Act, in response to his disclosures of SEC employee misconduct to the Commissioners of the SEC, and to members of Congress through meetings with congressional staff of the SEC's Oversight Committee," the complaint states.
"Mr. Weber disclosed to the Commissioners and Congress that H. David Kotz had engaged in misconduct when acting as the Inspector General. This misconduct compromised the integrity of several OIG [Office of the Inspector General] investigations, including the highly publicized inquiries into the SEC's mishandling of the Bernard L. Madoff and R. Allen Stanford Ponzi schemes.
"Mr. Weber also disclosed to the Commissioners and Congress the existence of severe breaches of SEC and national stock market computer security. These breaches may have compromised extremely sensitive information about the computer infrastructure system of every major stock exchange, including the New York Stock Exchange and the NASDAQ Stock Exchange. These breaches were caused by either the intentional or grossly negligence mishandling of sensitive computer equipment and data by SEC employees and management officials, all while the SEC failed to warn each of the affected exchanges of the breach.
"To this day, the SEC has still not adequately and fully disclosed and warned the stock exchanges of the breadth, severity, and nature of the information subject to compromise by the misconduct of SEC employees and management. Further, no audit trail will ever be able to identify the true nature and severity of the breach, because the employees and officers at issue, themselves highly skilled in hacking, IT security, and IT security incident response, intentionally disabled and prevented the ability of the SEC to learn this information, for unknown reasons.
"Instead of immediately taking action to remedy these significant failures, including by full notification of the breach to the exchanges, SEC officers and employees tried to 'cover-up' and 'white wash' these public relations disasters by discrediting Mr. Weber, defaming him in the public media with baseless and malicious accusations, unlawfully placing him on administrative leave status, and, later, wrongfully terminating his employment based on meritless allegations.
"These malicious and defamatory statements were leaked by SEC officers and employees to the public media, in violation of the Privacy Act. These leaks were intentionally timed to inflict maximum damage against Mr. Weber. Indeed, there are now pending motions related to a custody dispute of Mr. Weber's three young children which specifically cite the SEC's leaked allegations and Mr. Weber's work status as the grounds for arguing that Mr. Weber is not fit for additional custody of his children. Further, with every potential employer now able to read the SEC's allegations and Mr. Weber's current work status on the Internet, he is effectively unemployable in the private sector."