May 17, 2009

SEC probing alleged employee misconduct

The U.S. Securities Exchange Commission says it is investigating allegations a deputy director misused her authority in a personal matter.

Documents released from the agency's inspector general to The Washington Post and published Sunday allege Deputy Secretary Florence Harmon attempted to intimidate a Morgan Stanley stock broker over a disagreement about her mother's account, telling him of her position at the SEC and suggesting he Google her name.

The SEC inspector general referred Harmon, who continues to work for the agency, for disciplinary action, up to and including dismissal, the newspaper said.

Documents reportedly also reveal other investigations of possible infractions by SEC officials, including allegations that some enforcement lawyers may have sold the stocks of Citigroup, United Health Group and other firms while knowing the agency had opened investigations into them.

SEC spokesman John Nester told the Post the agency is moving to upgrade its employee compliance systems, saying a new computer system to report trading by SEC employees has been installed under new Chairman Mary Schapiro.