Did a senior regional official instruct examiners not to pursue "certain red flags" in an investigation that ultimately uncovered a massive fraud?  SEC Inspector General H. David Kotz is on the case.  The complaint claims the official was attempting to cover up the fact that he had missed the fraud in previous investigations.  Mr. Kotz notes that the official also surfaced in a previous Inspector General's investigation that found widespread viewing of Internet pornography on SEC computers.  Mr. Kotz doesn't name the official or the regional office involved.

Separately, the Office of Inspector General has been investigating whether an agency official violated federal laws, as well as conduct and ethics rules. This was revealed in a semi-annual report to Congress, which noted that his office has reviewed thousands of e-mails and interviewed some 18 SEC employees about the allegations.  Again, no identities nor any details of the alleged misconduct.

Mr. Kotz says in the report that he hopes to complete the new investigations within the next six months.   [CNBC.com, 11/30]