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Project on Government Oversight




Former SEC Lawyer Running for Congress Dimed Out Whistleblower

January 28, 2010 


The Project On Government Oversight (POGO) reveals in Politics Daily that George Demos, formerly an enforcement lawyer in the New York office of the Securities and Exchange Commission (SEC), had improperly disclosed protected, nonpublic information about a whistleblower to the counsel for that whistleblower's employer, major Wall Street bank JPMorgan Chase. Demos is currently running in New York’s First District Republican primary for a seat in the U.S. House of Representatives.

A March 2009 report by the SEC Inspector General (IG) cited a staff attorney in the SEC's New York office for violating SEC rules, but never publicly revealed the attorney’s name. The IG referred the case to the SEC's management for possible disciplinary action, but the agency took no action. Soon after that, Demos quietly resigned from his job and launched his bid for Congress.

It wasn't until POGO's investigation that Demos' name was linked to the case. In a letter to the New York State Supreme Court's Disciplinary Committee, Demos concedes that information about the whistleblower may have been released, but only in line with SEC "regulations and policies." Demos' statement appears to be at odds with the IG's finding. His letter also attacks the protected status of the whistleblower's information, arguing that the onetime JPMorgan employee "was owed no duty of confidentiality or loyalty by the Commission [SEC] or me"—another statement that contradicts the IG's conclusions.

The significance of the case goes beyond politics. In response to widespread public anger over Wall Street abuses and a weak economy, the SEC and its latest chairman, Mary Schapiro, have pledged repeatedly to protect whistleblowers and pay more attention to their reports of illegality and market abuse. The Madoff case itself involved a whistleblower whose information the SEC had largely ignored, and a financial analyst at a prominent Wall Street company said last year that he, too, had trouble getting phone calls returned by the SEC after informing the agency his employer might be breaking the law. In response, the SEC has launched a program to cope with the hundreds of thousands of tips it receives every year, but progress has been painfully slow. The Demos case is yet another example of the SEC’s failure to make a priority of whistleblower protection. 

Meanwhile, the SEC also appears to be brushing aside or delaying action on the recommendations of its own IG, and not just in the Demos matter. In response to a recent Freedom of Information Act request submitted by POGO, the SEC has said that since 2007 there have been more than 200 recommendations from its IG on which the agency has either taken no action, or on which action was still pending. 

“This is a perfect case study that demonstrates why we need culture change at the SEC,” said POGO Executive Director Danielle Brian.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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