SEC inspector general departs

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Kotz joined the agency in 2007, just before the financial crisis threw the nation's financial system in disarray and placed a bright spotlight on the SEC. Lawmakers in both parties were critical of the regulator in the aftermath of the crisis for failing to sniff out dangers early on. The SEC's inability to identify the massive Ponzi scheme perpetrated by Bernie Madoff became emblematic of the agency's failings, and continues to fuel its critics.

In his role, Kotz was charged with keeping an eye on an agency undergoing a massive overhaul. Schapiro was tapped by President Obama to take over the agency in 2009, and was charged with rejuvenating the watchdog to better police the nation's financial markets. Since then, the agency has been busy implementing several key components of the Dodd-Frank financial reform law.

Kotz's office issued a number of reports in the last year that attracted substantial attention on Capitol Hill. In May, he criticized the agency of leasing 900,000 square feet of space without having the necessary funds on hand, leading to accusations of government waste by Republicans.

He also called for further investigation into potential ties between the SEC's former general counsel and Madoff. David Becker, who headed the SEC's legal arm in 2011, said the SEC's ethics office cleared him to work on Madoff-related matters, even though his late mother once had an account with him.

Kotz also warned against major budget cuts to the SEC as Republicans looked to trim federal spending.

“I am tremendously proud of the accomplishments of my office and the agency over the past four years. 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," Kotz said in a statement. "While I will miss doing this important work, I am gratified knowing that nearly every aspect of the SEC has been significantly improved in the four years since I was named Inspector General."

Kotz will join the corporate investigation firm Gryphon Strategies as a managing director.