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SEC settles with whistleblower for $580K

Steve Lash//Daily Record Legal Affairs Writer//June 12, 2013

SEC settles with whistleblower for $580K

By Steve Lash

//Daily Record Legal Affairs Writer

//June 12, 2013

An attorney who claimed he was fired from the Securities and Exchange Commission for having told superiors and congressional committees of agency misconduct has received $580,000 in settlement of his unlawful-retaliation lawsuit against the SEC.

David P. Weber, then an assistant inspector general at the SEC, told supervisors and Senate and House oversight committees last year of the commission’s negligent handing of computer information that might have given hackers easy access to the New York and NASDAQ stock exchanges and threaten the integrity of the U.S. trading system.

Weber also said that former SEC Inspector General H. David Kotz, who resigned in January 2012, had possessed a potential conflict of interest in the agency’s earlier investigation of Texas financier R. Allen Stanford’s investment-fraud scheme. Weber said Kotz was friends with an attorney representing the alleged victims of Stanford, who was convicted last year and sentenced to 110 years in prison.

The SEC responded to Weber’s disclosures by alleging he had openly discussed the possibility of carrying a concealed weapon on the job, according to his lawsuit filed in the U.S. District Court in Washington.

Weber’s attorney, Cary J. Hansel III, said the SEC’s allegation was a pretext for placing the assistant inspector general on leave before firing him. The only time Weber had spoken of weapons was when he suggested the SEC reinstate its practice of having sworn and armed agency police officers, Hansel said.

The SEC admitted no wrongdoing in agreeing to the settlement.

“The settlement resolves the matter to everyone’s satisfaction and permits the Office of the Inspector General to focus on its important work,” SEC spokesman John Nester stated via email.

Hansel said his office received the $580,000 settlement payment via a wire transfer earlier this week.

“The story of this case is a success story for the whistleblower,” said Hansel, of Joseph, Greenwald & Laake P.A. in Greenbelt. “It is a cautionary tale for anyone who would retaliate.”

Hansel praised the cooperation he received from the SEC under its new chair — Mary Jo White, who took office on April 10 — in reaching the settlement.

“I’d like to think it marks a change in direction at the SEC,” Hansel said.

SEC’s current inspector general, Carl W. Hoecker, took office Feb. 11.

Weber’s allegations of SEC misconduct were largely substantiated in a report last September by the U.S. Postal Service’s inspector general. The report concluded that Kotz should have excused himself from the Stanford investigation due to the appearance of a conflict and that Weber did not exaggerate the potential security threat due to the mishandling of computers.

The report also cleared Weber of the misconduct SEC alleged in placing him on leave.

The Postal Service inspector general investigated Weber’s allegations because the alleged misconduct involved the SEC inspector general’s office.

Kotz did not return a telephone message seeking comment on the report. Kotz is now with Berkeley Research Group LLC in Washington, where he conducts forensic accounting and investigations for clients, according to the firm’s website.

Despite the report, Weber was fired on Oct. 31, and he filed suit on Nov. 15.

Under terms of the settlement, the SEC cleared Weber’s employment file of negative references, and his termination was rescinded. Weber, having gotten his job back, promptly “resigned,” Hansel said, noting his client is quite happy in private law practice.

“The purpose of reinstatement was to demonstrate that the termination was inappropriate,” Hansel said. “He has no intention of going back.”

After his termination, Weber formed the law firm Goodwin Weber LLC with his wife, Julie Goodwin Weber, and father-in-law, Robert S. Goodwin. The firm has offices in Gaithersburg and Washington.

“Now that my name has been cleared, I look forward to helping others through my growing law and forensic investigations practice,” Weber said in a statement.



U.S. District Court, Washington, D.C.

Case No.:



Richard W. Roberts


Settlement ($580,000 to plaintiff)


Event: Oct. 31, 2012

Suit filed: Nov. 15, 2012

Notice of voluntary dismissal: June 12, 2013

Plaintiff’s Attorney:

Cary J. Hansel III of Joseph, Greenwald & Laake P.A. in Greenbelt.

Defendant’s Attorney:

John G. Interrante of the U.S. Attorney’s Office in Washington, D.C.


Violations of due process and the Administrative Procedure Act


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