WASHINGTON (Reuters) - David Kotz, the top watchdog of the Securities and Exchange Commission, is facing mounting criticism over some of the investigative techniques that have won him plaudits on Capitol Hill. This year, two SEC employees filed formal complaints against Kotz, alleging the 45-year-old inspector general bullied witnesses and twisted facts to build a case against them.
The two employees say Kotz sometimes smears reputations, according to copies of the complaints filed with a government council that monitors the work of 73 federal inspectors general.
One of those employees, Nancy McGinley, an enforcement attorney accused by Kotz in 2009 of possibly using confidential information before trading in shares of Citigroup and Schlumberger, says the Office of the Inspector General engaged in "abusive investigative practices." Reuters has confirmed federal prosecutors declined to act on a criminal referral Kotz sent them about McGinley's trading.
In her complaint, a copy of which was reviewed by Reuters, McGinley says Kotz's tactics "have caused SEC employees to fear the OIG's false allegations and retaliations."
Current and former SEC employees and outside lawyers say Kotz's quest to uncover waste, fraud and abuse at the nation's top securities agency has gone overboard. They say Kotz's over-zealousness has led some talented lawyers to leave the agency and others to worry about being second-guessed in making decisions about enforcement actions. (Read the full story at Reuters)