Haraz N. Ghanbari/AP
H. David Kotz, who since 2007 has served as the lightning-rod inspector general at the Securities and Exchange Commission, is leaving government at the end of January to work for a private investigation firm.
"I am tremendously proud of the accomplishments of my office and the agency over the past four years," he said in a statement. "The reports we have issued have not only been significant to the agency, Congress and the investing public, but they have also directly resulted in a transformation of many of the divisions and offices of the commission."
SEC Chairwoman Mary Schapiro said Kotz's work "helped us to identify areas where we needed to improve the way we operate, bolster our resources and upgrade our technology."
His efforts to expose misconduct by individual SEC employees prompted former commission chairman Harvey Pitt to call his tenure a "reign of terror" in a statement to The Wall Street Journal.
Kotz served during troubled times at the independent agency, including the failure to detect the Ponzi scheme of Bernard Madoff, a misapplied policy on financial document shredding, and a mishandled attempt to expand office space in anticipation of hiring more employees to implement the controversial 2010 Dodd-Frank financial reform law.
His emphasis on the value and inviolability of whistleblowers impressed Sen. Chuck Grassley, R-Iowa, who issued a statement saying, "The agency has a big job and faces ongoing challenges to stay on top of fraud . . . David Kotz produced strong, conclusive reports, even as critics claimed he was too aggressive. An aggressive, independent inspector general is best for the agency in the long run, even if that's uncomfortable for management . . . Go-along-to-get-along just doesn't get the job done. You need someone who tells it like it is."
Kotz also drew praise from Danielle Brian, executive director of the nonprofit Project on Government Oversight. "Kotz did what IGs should do: he was very engaged with the Congress and wasn't afraid to point out clearly when his agency wasn't doing its job," she told Government Executive. "He came in at a time when the SEC was in need of a tough critic -- and his investigations had some real impact." She noted that the Justice Department recently announced that it had fined a former SEC enforcement official "who went through the revolving door" to work for indicted financier Allen Stanford after delaying investigation into Stanford's alleged Ponzi scheme, a conflict exposed by Kotz's team.
Stephen Kohn, executive director of the National Whistleblowers Center, credited Kotz for an "excellent" investigation in the Madoff case and for strengthening SEC whistleblower protections, especially in the lead-up up to passage of the Dodd-Frank reforms.
Kotz previously served as IG for the Peace Corps, and worked for the U.S. Agency for International Development after leaving a law practice. In joining the investigative services firm of Gryphon Strategies in Washington, he plans to focus on corporate fraud, assisting whistleblowers and improving government accountability.