blowvember

A Children’s Treasury Of Things In New SEC Lawsuit That Are More Hilarious Than Its Sex Triangle

Not even kidding, this guy was getting so much strange (ALLEGEDLY)Oh goody, another day, another set of government officials involved in a sex scandal. Rolling Stone brings us the ewww tale of SEC Inspector General David Kotz (ALLEGEDLY) boning every lawyer (like this pretty lady) with business before the agency, as well as his successor, Noelle Maloney, who then refused to meet with said lawyers because
“DAVID WAS FUCKING THAT LADY!” Until we see pix, it’s no Broadwell-Kelley Tampa Tap-Out. So what else is in this 77 page whistleblower complaint, you might be wondering? Is it all seks and lies and intrigue?

Well, sure there is some! But more hilarious are the accusations of gross malfeasance and incompetence, the likes of which (if true) may be egregious enough to compromise the functioning of Stock Exchange itself (to the degree that it functions right now, of course). No big deal though!

First things first: the SEC at one time spent $4 million to rearrange the desks of less than 2000 employees:

PAGE 10:

[Maloney] described an affair that Kotz had during a review conducted by the OIG into the SEC’s “Restacking Project,” in which the SEC spent approximately $4 million dollars relocating the desks of around 1,750 SEC employees. Maloney stated that Kotz had an affair with one of the key SEC personnel involved with this project, despite being responsible for leading the review, and having personally authored sections of the final report, concerning the allegations of waste in the project.

Also, at one time, a 23 year old recent college grad, with no experience in security, was possibly hired by the Chief of Security to oversee physical security at the SEC:

PAGE 22:

[A] whistleblower, who was responsible for performing physical security for the SEC, was ultimately transferred by [Chief of Security William S.] Fagan, and his/her position was filled by a 23 year old female, who has no experience in security services and whose father has a personal connection to Fagan. This replacement employee was hired directly after college graduation, with no security experience whatsoever, and in violation of the Merit Systems principles for competitive service hiring.

Up to 100 employees were maybe handling extremely sensitive material absent any background checks:

PAGE 27:

[At one point, anywhere from] 50 to 100 SEC contractors were employed at the SEC without any background screening due to backlog. Many of these employees, like [a] contractor involved in [a sexual] assault [on SEC property], had never been screened, despite having been employed at the SEC for years. Some of these employees, like the contractor, were granted access to the SEC’s most confidential data, such as consumer records and confidential, corporate records produced to the SEC in investigations…

One of them was on early parole release for felony narcotics possession.

PAGE 27

Further, the OIG obtained the criminal background [of a particular contractor] which showed that he had multiple criminal convictions and was on an early parole release from a 10 year prison sentence in the Commonwealth of Virginia for felony narcotics distribution. Despite this criminal background, the contractor had been permitted to work with the SEC’s most sensitive enforcement data as an enforcement forensic IT contractor for years.

Sadly, “Penetration Testing” has naught to do with sexytime.

PAGE 35:

SEC examiners assigned to the Division of Trading and Markets performed “penetration testing” of the computer infrastructure of the NYSE, NASDAQ, and all other major exchanges. […]

The information obtained by this ARP examination program is of an extremely sensitive nature. In the wrong hands, this information could be used to disrupt trading activities on all of the exchanges, either individually by exchange, or at all exchanges simultaneously…In the OIG inquiry into the alleged misuse of computer equipment, Weber and his investigators found that the laptops which were used by SEC examiners during these examinations, and on which all the information from the examinations were stored, neither contained virus protection, encryption programs, or firewalls, nor were they ever wiped clean after testing. Some of the computers at issue were used in every stock exchange in the United States, and therefore exposed exchanges to infections or compromises that could be brought from exchange to exchange…

Some of these laptops were brought to foreign countries by SEC management, and by certain SEC management and employees to the “Black Hat” Conference in Las Vegas, Nevada.

Many of these unsecured laptops were probably brought to a hacker convention in Vegas.

PAGE 36:

The “Black Hat” Conferences are infamous for the illegal activities that occur during the Conferences. In an August 4, 2009, CNN article describing these conferences, the author notes, “[a]t a hacker conference no one is safe.” Indeed, senior IT security personnel at the SEC had acknowledged to Weber as part of the investigation that they were themselves too afraid to attend this Conference.

a.            During the 2009 Conference, websites belonging to security researchers were hacked and passwords, private e-mails, and other sensitive documents were released on a vandalized website.

b.            During the 2008 Conference, a thumb drive that was passed around by attendees was found to contain a computer virus.

c.            During the 2008 Conference, some attendees, themselves security experts, who used the Wi-Fi networks had their passwords “sniffed” and then posted on an electronic bulletin board called the “Wall of Sheep.” One “Wall of Sheep” participant remarked how surprising it was that so many Black Hat attendees were insecure.

d.            Also during the 2008 Conference, three French reporters were caught hacking into the press room network.

It’s cool though. No big deal.

PAGE 38:

When Weber questioned the SEC examiners as to why they would bring their laptops, containing extremely sensitive information, including the architecture and trading engines of the major stock exchanges, to the Black Hat Conference, they replied to the effect that they didn’t “think it was a big deal.”

So what happened, in the end, after this Weber guy became absolutely panicked at the thought of SEC employees or contractors, who may or may not have been given security clearance, taking unsecured laptops to a hacker convention in Vegas filled with foreigners, networking experts, and French reporters? Weber was canned, and forcibly escorted off SEC property.

But it’s cool, we’ll just hope that none of this stuff is true and all this personal financial information — as well as the integrity of the stock market — is ok.

[Rolling Stone]

About the author

Kris E. Benson writes about politics for Wonkette and is pursuing a doctorate in philosophy. This will come in handy for when they finally open that philosophy factory in the next town over. @Kris_E_Benson

View all articles by Kris E. Benson
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113 comments

  1. tiredalways

    If you can't hire your friend's daughter right out of college, what the point of being SEC Inspector General anyway?

      1. Botlrokit

        If you can't hirebone your friend's daughter right out of college, and everyone else in your office, what's the point of being SEC Inspector General anyway?

        et tu!

  2. Negropolis

    Never has the definition of "strange" made more sense than when I viewed that picture. Strange, indeed. It couldn't be anything other than strange.

    1. Terry

      How is it that enforcement of rules varies so much between Federal agencies?

      At some Agencies, they have been trying to ban smart phones in the federal buildings (rotsa ruck with that) while at the SEC, they're handing data to hackers at a hackers convention.

      1. HistoriCat

        Because free markets are the bestest thing ever and anyone who has any connection at all to the stock market should be left alone. OK, the SEC is a governmental entity (ew!) but since they interact with the job creators, we should govern with a light hand.

  3. Goonemeritus

    Sure some of this looks bad but thanks to the natural ability of financial markets to regulate themselves what could really go wrong?

  4. PubOption

    A former drug dealer would probably be an asset to the SEC. He would know which traders were doing coke, and might have some idea about the strippers.

  5. Negropolis

    When Weber questioned the SEC examiners as to why they would bring their laptops, containing extremely sensitive information, including the architecture and trading engines of the major stock exchanges, to the Black Hat Conference, they replied

    …porn. The end.

  6. Botlrokit

    During the 2008 [Black Hat] Conference [in Las Vegas], a thumb drive that was passed around by attendees was found to contain a computer virus.

    Bet that wasn't all that came home with a virus.

  7. Vecchiojohn

    I used to work at a huge law firm where the asshole quotient was through the roof, but biggest shits, pound for pound, were always the securities lawyers.

    1. Tundra Grifter

      Do you think they were frustrated they hadn't gone over to The Dark Side and made fortunes working for investment banks, telling them how to get around the laws, rules and regulations?

  8. SorosBot

    "we’ll just hope that none of this stuff is true and all this personal financial information — as well as the integrity of the stock market — is ok."

    Silly Wonkette the grand Wall Street casino has no integrity.

  9. mrpuma2u

    Wow my faith in capitalism is restored. Seriously, what a bunch of incompetent fucktards. Fire them all, and give someone who wants to WORK (vs post on some snarky website) a job.

        1. Tundra Grifter

          I have been asked "Why would a boy think just because he is kissing a girl she doesn't know what his hands are doing?"

  10. Terry

    "Many of these employees, like [a] contractor involved in [a sexual] assault [on SEC property]"

    WTF?

    The SEC sounds like a badly run frat house.

  11. boskolives

    Oh crap, I read through all that stuff only to find out it's just about a SEC lawsuit, I thought I was going to be reading a story about a butt-SECs lawsuit.

  12. not that Dewey

    Does anyone else find it disturbing and/or ironic that it seems as though everyone and his brother is having more sex triangles than the perverts and dick joke enthusiasts of Wonkette? Pythagoras weeps.

    1. Negropolis

      I know, right? Are we just to assume that every government worker in every department and agency is having sex with each other? Sweet baby jeebus, these guys are seeing more ass than a Hollywood casting couch.

      1. BaldarTFlagass

        As a government worker, let me assure you that I wouldn't fuck more than about 10% of my female coworkers, with someone else's dick even.

  13. BaldarTFlagass

    I guess that in order to specialize in securites law, there is a class you have to take called "Pelvic Thrust?"

  14. SorosBot

    "Some of the computers at issue … exposed exchanges to infections "

    Just like Kotz did to the SEC's personnel. Allegedly.

  15. Chow Yun Flat

    SEC spent approximately $4 million dollars relocating the desks of around 1,750 SEC employees.

    At $2,285 per desk the SEC must have gotten the real gold standard of relocation services.

    1. Tundra Grifter

      WADR, I think that's sloppy reporting. Some of us remember what was like to work in an office – chance are there were also cublicles to be moved, wires changed, HVAC work, and various other items as well as desks, chairs, filing cabinets, etc.

      Often the work is done on nights and weekends. Also.

    1. NorthStarSpanx

      Sarah Palin's ex brother in law is an office environment consultant. To not have landed such lucrative dills in Rill Amercia, I think he's not doing it right.

  16. Joshua Norton

    Also, at one time, a 23 year old recent college grad, with no experience in security, was possibly hired by the Chief of Security to oversee physical security at the SEC:

    See Exhibits A,B,C and double D.

  17. BaldarTFlagass

    I went over to the Rolling Stone article that was linked, but ended up clicking on the "40 Best Led Zep Songs Evah" link and reading that instead. Really, "Whole Lotta Love" at Number One? For me its a tossup between "Kashmir" and "Achilles' Last Stand."

  18. delaney_blom

    The Black Hat Conference is no big deal, just a bunch of fuckin nerds.

    Wanna go do blow and have an orgy on my yacht?

  19. Guppy

    This replacement employee was hired directly after college graduation, with no security experience whatsoever, and in violation of the Merit Systems principles for competitive service hiring.

    Dammit, who do I have to fuck to get into that express-lane hiring, or do I need to have tits?

  20. Mahousu

    Gaytri Kachroo has to be the greatest name I've ever seen. I think I'm just going to go around saying "Gaytri Kachroo" all day.

  21. PhilippePetain

    Huh, this is the kind of stuff you would think would get worked out if the opposition party wasn't busy spending their time parading their tinfoil hats on Fox news 24/7.

  22. ttommyunger

    If Justice follows its usual course, the alleged offenders will all be promoted and the whistleblower will do a hefty prison sentence for, oh, I don't know, Mockery & Gawkery, Severe Mopery or some-such.

  23. HouseOfTheBlueLights

    "50 to 100 SEC contractors were employed at the SEC without any background screening due to backlog"

    I teach figure skating part time (like 5 hours per week). For this privilege, I have had to undergo FIVE count 'em FIVE background screenings, which I had to pay for. So if anyone at the SEC needs figure skating lessons, they can call me. I'm covered.

  24. oldedinvn

    I am jealouse. I am a dolt what dint not know how easy it is to get laid if I had decided to serve my fallow humans.

  25. RalphCrown

    Remember there's a revolving door between the SEC and Wall Street. So you can bet these kinds of shenanigans happen at the trading houses all the time. The difference is, you make enough money to buy your way out of trouble.

  26. sati_demise

    This is the same SEC that was charged with porn addiction, massive amounts of computer time wasted watching porn at their new desks.
    Maybe it was a privacy issue, moving desks so they could watch their porn with some privacy.

Comments are closed.