SEC Porn Scandal – who regulates the regulators?

A dunce cap

The SEC porn scandal begs the question of whether the agency needs a Dunce Cap. Photo from Wikimedia Commons.

Apparently, there isn’t very much to do at the Securities and Exchange Commission.  More than 30 SEC employees were found to have surfed or downloaded from adult websites over the last two years, according to a recent internal report that has just been released, and the SEC porn scandal is appearing at the worst possible time.  Granted, the viewing of said websites was only conducted by a few bad apples, fewer than 40 employees, but some were high ranking.  Some are still employed, but public outrage will see them running for payday loans and a new job before long.

SEC Porn Scandal started with the recession

While Wall Street collapsed and thousands were laid off and foreclosed on, the SEC porn scandal was beginning.  While people suffered, a few bad apples surfed lascivious websites.  In the internal revue of the SEC, the SEC Office of Inspector General (SEC OIG) found, according to CNN, that at least 31 SEC employees were engaging in said behavior over the last two years.  Several persons in question habitually downloaded illicit material for up to 8 hours a day.  At the rate some of these individuals were going, they would be needing personal loans for memory expansions before long.

Investigation initiated by Chuck Grassley

Senator Chuck Grassley (R-IA), from an ABC report, requested an internal review of the SEC, since the Securities and Exchange Commission will be playing a big part in financial reforms.  Part of the findings were that half of the discovered individuals were senior employees and made $99,000 a year or more.  A senior SEC attorney had downloaded so much, he had to start downloading to CDs and DVDs which began filling boxes in his office.

The internet is for…

Despite the wisdom of the musical Avenue Q (an infamous musical number from the play declares the internet is for…well, you figure it out), this is not funny.  SEC employees are on the payroll of the taxpayers.  There are clear rules of conduct for government employees, and lascivious behavior while in the employ of the public is certainly not within them. Then again, Bill Clinton, Mark Sanford and Eliot Spitzer didn’t get that memo either.

What does this mean?

Granted, there are always bad apples, and this is less than 1 percent of the number of people employed by the SEC.  This doesn’t mean that the SEC was asleep at the wheel for the financial crisis, but it does look very bad for the key agency for financial regulation and financial reform.