(Bloomberg News) The U.S. Securities and Exchange Commission is planning to hire an outside investigator to probe complaints about the agency's internal watchdog unit after its top official stepped down amid complaints about his work.

"An individual has raised allegations of misconduct by former and current employees in the office of inspector general," John Nester, an SEC spokesman, said Monday in an e-mail. "The matter was promptly referred to the Council of Inspectors General on Integrity and Efficiency. We are also in the process of hiring an independent investigator to review the claims."

Nester didn't say whom the agency would hire or specify the allegations and targets they would pursue.

The SEC hasn't had a permanent inspector general since January when H. David Kotz resigned after four years in the post. Kotz was lauded by lawmakers for his scrutiny of SEC missteps in overseeing financial firms including Bear Stearns Cos. and Bernard Madoff Investment Securities LLC. while facing criticism from current and former employees over his pursuit of investigations that some said lacked evidence of wrongdoing and unfairly hurt workers' reputations.

His decision last year to refer former SEC General Counsel David Becker to federal prosecutors for possible criminal ethics violations stemming from his work on policy related to Bernard Madoff's Ponzi scheme helped spark the backlash. Becker, who inherited profits from his parents' account withMadoff, was cleared by the Justice Department in November.

Cannella Interview
Kotz's contacts with Phillip Cannella III, a financial adviser from the Philadelphia area who markets "crash-proof" retirement plans, also have come under review. In late July, Kotz gave Cannella a 75-minute interview at the SEC's Washington headquarters.

The SEC has pressed unsuccessfully for Canella to remove video clips from the interview from his website, saying their use could imply that Kotz or the agency endorsed his business.

Kotz confirmed to Bloomberg News in December that after the interview Cannella got him three club-level tickets for a sold-out football game between the Philadelphia Eagles and New York Giants. He reimbursed Canella $95 per ticket, though the Eagles valued them at $240 each.

The former SEC watchdog, who is now a managing director at Gryphon Strategies in Washington, declined to comment Monday on the outside investigation.

Grassley Questions
Senator Charles Grassley, an Iowa Republican who defended Kotz during his time at the SEC, questioned whether the agency should pursue an investigation.

"I know from prior experience that outside investigators can get very expensive for taxpayers," Grassley said in an e- mail Monday. "There are governmental structures in place to investigate allegations against an inspector general. I intend to find out more from the SEC about the allegations and the rationale for hiring an outside investigator."

A spokesman for the Federal Bureau of Investigation didn't respond to a telephone call after normal business hours for comment on behalf of the inspectors general panel.