David Kotz, Inspector General, to Leave S.E.C.

WASHINGTON — The inspector general of the Securities and Exchange Commission, who has been a thorn in the side of the agency over its fumbling of early inquiries into the Madoff and Stanford cases, will leave the commission at the end of January to join a private investigations firm.

H. David Kotz, who has been inspector general for the S.E.C. since December 2007, will join Gryphon Strategies, an investigative company, as a managing director in its Washington office, he said Tuesday. He will focus on corporate fraud investigations and “assisting whistle-blowers in exposing fraud and improving government accountability,” an S.E.C. announcement said.

Mary L. Schapiro, chairwoman of the S.E.C., called Mr. Kotz “a committed public servant who has served the agency with great distinction for the past four years.”

“His work helped us to identify areas where we needed to improve the way we operate, bolster our resources and upgrade our technology,” she said.

In addition to lengthy reports documenting the S.E.C.’s failure to act on tips that the investment firms of Bernard L. Madoff and R. Allen Stanford may have been running huge frauds, Mr. Kotz also exposed more than 30 S.E.C. employees, including more than a dozen senior officers, who had been using their workdays and government computers to regularly visit Internet pornography sites.

Other investigations focused on the lack of significant oversight of Bear Stearns before its collapse and on insider trading and conflicts of interest among S.E.C. employees.

Most recently, Mr. Kotz criticized the commission for hiring a general counsel who had an interest in settlements related to the Madoff fraud, and for leasing $556 million of office space for the S.E.C. without competitive bids and before Congress had appropriated money to pay for it.

Senator Charles E. Grassley, an Iowa Republican who frequently tangled with the S.E.C. over its shortcomings, praised Mr. Kotz for staying on top of the agency’s failures, and urged the agency to hire another inspector general who would be a strong policeman of the agency.

“David Kotz produced strong, conclusive reports, even as critics claimed he was too aggressive,” Mr. Grassley said. “An aggressive, independent inspector general is best for the agency in the long run, even if that’s uncomfortable for management.”

Mr. Kotz, who at various times recommended substantial changes in the S.E.C.’s organizational structure, said he was “gratified to know that nearly every aspect of the S.E.C. has significantly improved in the four years since I was named inspector general.”

“The reports we have issued have not only been significant to the agency, Congress and the investing public,” he added, “but they have also directly resulted in a transformation of many of the divisions and offices of the commission.”

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