S.E.C. Official Demoted Despite Spotting Stanford By BEN PROTESS
Julie Preuitt repeatedly sounded the alarms from 1997 onward that the Texas financier R. Allen Stanford was operating a huge Ponzi scheme. Those concerns were ignored until 2009, when her bosses at the Securities and Exchange Commission finally brought action against Mr. Stanford.
But no good deed goes unpunished, Ms. Preuitt said in Congressional testimony on Friday. Ms. Preuitt said she had been marginalized and demoted at the S.E.C., where she once oversaw examiners in the agency’s Fort Worth office.
The falling-out stems from a 2007 effort by Fort Worth S.E.C. officials to increase their examinations of financial firms. Ms. Preuitt, who still works in the Fort Worth office, warned that the policy change was superficial and would cause regulators to avoid investigating complicated schemes, like the $7 billion fraud that Mr. Stanford is accused of running.
Ms. Preuitt brought the concerns to her bosses and later complained to officials in the agency’s Washington headquarters. In turn, Ms. Preuitt received a letter of reprimand. The agency later transferred her to a nonsupervisory position, which in essence was a demotion.
Ms. Preuitt told lawmakers on Friday that she remains in that role, even though the S.E.C.’s internal watchdog issued a report last year that said the agency had treated her “improperly.”
The report also recommended that the agency consider disciplining two Fort Worth managers who penalized Ms. Preuitt.
“The commission has failed to discipline any one, at least not visibly, nor has there been any effort made to restore me to a position with similar duties and responsibilities to the one held before,” Ms. Preuitt said in testimony before the House Financial Services Committee. “I paid a heavy price for complaining.”
The issue was further complicated by internal drama at the Fort Worth office. The S.E.C. official who proposed the new examination policy had earlier edged out Ms. Preuitt for a high-ranking position in the office.
The S.E.C. also argued that Ms. Preuitt failed to follow orders and issued her complaints in an antagonistic way. The watchdog report did not dispute that claim.
Still, the S.E.C.’s inspector general said some S.E.C. officials mistreated Ms. Preuitt.
“We found that it was improper for Fort Worth management to take action against employees for voicing opposition to a program initiative and for bringing complaints to senior S.E.C. management,” the inspector general, H. David Kotz, said in prepared testimony on Friday.
Ms. Preuitt told lawmakers that she has been “excluded from training and participation in management meetings or decisions.”
She also warned lawmakers that her “situation should not be viewed in isolation.”
“It is part of a cultural problem which continues to impact the commission’s effectiveness,” she said.
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