Video: SEC officials watched porn at work

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    >> a run away mom.

    >>> internet porn has entered into the debate over financial reform. dozens of senior staffers were spending hours surfing x-rated websites when they were supposed to be policing the nation's financial system . many of the instances occurred as the economy nearly went over a cliff. ed o'keefe joins me live. come on. really? some of the accusations in this report are stunning. let's look at a few of them. a senior attorney spent up to eight hours a day downloading pornography. then, the accountant trying to access online porn who was blocked 16,000 times a month. senior employees earning more than $200,000 a year.

    >> let's make it clear this isn't exclusive to the s.e.c. or the federal government . in fact, there are some polls that suggest as much as 16% of men have admitted to looking at inappropriate websites in the workplace. but in the case of the s.e.c. , there's been about 33 cases in the last five years. 31 involving real senior folks. the agency points out they have either suspended or are in the process of disciplining the employees. that it was their internal safeguards that caught this. and there is software on the computers of these employees, but in many cases, they were able to work around it.

    >> as our nation's economy was about to go over a cliff, was it too big of a leap to say these employees spending more time doing their job, we could have avoided this financial meltdown?

    >> that's a bit of a stretch because we don't know what all 33 of these folks were supposed to do. a lot of them were regional accountan accountants, which doesn't give us a good sense of where they were working and what they are working on. what i will say though is note the fact this was released by senator charles grassley of iowa. it's release less than a week after the s.e.c. announces its filing charges against goldman sachs . republicans aren't pleased about this. we have a report that shows republican members of the s.e.c. were skeptical about filing these charges. somewhat discrediting the agency and the general debate about financial regulatory reform , so i actually draw a little more suspicion around the timing of this release as opposed to the fact workers may have been doing this. it's inappropriate, inexcusable, but would they have helped stave off the financial crisis , i don't necessarily -- it doesn't necessarily appear that would be the case.

    >> the report released for political reasons? you're kidding me. thanks so much.

updated 4/23/2010 2:04:42 PM ET 2010-04-23T18:04:42

Senior staffers at the Securities and Exchange Commission spent hours surfing pornographic websites on government-issued computers while they were being paid to police the financial system, an agency watchdog says.

The SEC's inspector general conducted 33 probes of employees looking at explicit images in the past five years, according to a memo obtained late Thursday by The Associated Press.

The memo says 31 of those probes occurred in the 2 1/2 years since the financial system teetered and nearly crashed.

It was written by SEC Inspector General David Kotz in response to a request from Sen. Charles Grassley, R-Iowa.

The memo was first reported Thursday evening by ABC News. It summarizes findings of past inspector general probes and reports some shocking findings:

  • A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.
  • An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "Pornography." Yet, he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense and received a 14-day suspension.
  • Seventeen of the employees were "at a senior level," earning salaries of up to $222,418.
  • The number of cases jumped from two in 2007 to 16 in 2008. The cracks in the financial system emerged in mid-2007 and spread into full-blown panic by the fall of 2008.

California Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, said it was "disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation's economy on the brink of collapse."

He said in a statement that SEC officials "were preoccupied with other distractions" when they should have been overseeing the growing problems in the financial system.

SEC spokesman John Nester said in a statement Friday that each of the offending employees has been disciplined or is in the process of being disciplined, and some have already been suspended or dismissed.

"We will not tolerate the transgressions of the very few who bring discredit to their thousands of hardworking colleagues," said Nester, adding the agency has lately increased penalties.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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