The embarrassing drama at the SEC's office of the inspector general seems to have reached an apex, as a complaint filed by a former internal watchdog at the agency has found its way online.

SEC assistant inspector general for investigations David Weber was first put on administrative leave and then fired for, allegedly, threatening his co-workers and trying to bring a gun to the office. But this week he sued the agency for $20 million, claiming he was in fact forced out and slandered in the press for bringing concerns about sexual misconduct and security breaches up the ladder.

Weber's complaint makes some wild accusations. He claims that his former bosses H. David Kotz and Noelle Maloney were having an affair that, through its complex interrelationships with other affairs the two were having, compromised the SEC's internal investigations relating to the Madoff and Stanford Ponzi schemes.

Along with the sex, Weber's suit reveals some amazing incompetence and negligence at the commission. It describes "[s]evere breaches of SEC and national stock market computer security" which "may have compromised extremely sensitive information about the computer infrastructure of every major stock exchange," including NYSE and NASDAQ.

Apparently, the agency ran cybersecurity tests on the major exchanges to determine their vulnerability to attack. The results of these tests were kept, unencrypted, on laptops that SEC agents travelled with.

Weber claims that in one case agents even brought these laptops -- containing copies of "all the major exchanges'... entire intranet and internal infrastructure" -- to a hackers' conference in Las Vegas.

And Weber is no admirer of SEC chief Mary Schapiro. He claims that she pushed for the bungled cyber-threat analysis, and he launched an investigation into whether Schapiro had perjured herself in congressional testimony about the agency's attempt to find new office space.

The exhaustive, salacious complaint is available in full on the ThomsonReuters website. 

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