(Corrects who convened meeting in eighth paragraph, deletes reference to Freedom of Information Act request in 16th paragraph.)

George Canellos, 48, has one of the Securities and Exchange Commission’s top jobs. The SEC’s new chairman, Mary Jo White, appointed him as co-director of the enforcement division, along with Andrew Ceresney, a former partner of White’s at Debevoise & Plimpton. Their job is to oversee 1,200 investigators, accountants and lawyers who try to root out corruption on Wall Street. Canellos should be above reproach.

But his alleged treatment of Kathleen Furey, 56, a senior SEC lawyer and whistle-blower, who worked in the agency’s New York office while Canellos was in charge makes me wonder if he’s the right man for the job. If White is serious about reforming the agency -- as she claimed during her confirmation hearing -- she will examine what happened to Furey, as described in a recently filed complaint against the SEC.

Below is a synopsis of Furey’s story based on her complaint, which she hopes will result in a lawsuit that seeks back pay, a promotion and an end to what she claims is retaliation by her supervisors.

Furey, a graduate of the University of Virginia and Fordham University Law School, joined the SEC in September 2004 as a law clerk in the enforcement division, and soon won praise and promotions from her supervisors, who cited her work ethic and her deft skill as a litigator.

Investigation Starts

Starting in December 2004, Furey began investigating an investment adviser -- the name is redacted in my copy of the complaint -- for violations of the Investment Company Act of 1940 and the Investment Advisors Act of 1940. By August 2007, after another promotion, Furey was becoming concerned that the case hadn’t advanced quickly enough to the formal-investigation stage, a prerequisite for the SEC to issue subpoenas.

According to her complaint, she decided to go over the head of her boss, Joseph Dever, and to alert George Stepaniuk, the assistant regional director of the New York office. Stepaniuk told her “We don’t do investment-management cases in this group,” according to her complaint.

Furey took the matter to Stepaniuk’s boss, David Rosenfeld, and asked for a transfer. She suggested to Rosenfeld that she could take the case to a different part of the SEC and move forward with it.

On Dec. 6, 2007, Mark Schonfeld, the New York office’s regional director, called a meeting with Furey, Stepaniuk and Rosenfeld, according to her court filing. He offered Furey two choices: She could either drop her claim that Stepaniuk refused to pursue investment-manager cases or she could take the matter up with David Kotz, the agency’s inspector general from 2007 to 2012. Two weeks later, the suit says, she e-mailed Kotz’s staff and described her case as well as two others -- involving investment managers -- “that were going nowhere.”

The reprisals had already begun, according to her complaint. For instance, in November 2007, Furey’s boss, Dever, told her that he had taken over her investment-manager investigation. In March 2008, Dever sent Furey an e-mail telling her “you should not communicate with me one-on-one”; “you should know that I am keeping a record of your campaign to harass me”; and that her actions had impeded the investment-manager probe, her complaint says.

Dever copied the office chain of command, including Stepaniuk, Rosenfeld and Schonfeld. “Dever sent his e-mail declaring his personal vendetta against Furey to all of his supervisors,” according to her complaint. (In an April 18, 2008, report, Kotz wrote that he found no evidence that SEC officials declined to pursue cases involving investment-management firms, but he did find that the SEC’s New York office supervisors “created an atmosphere of fear, frustration and confusion among many staff,” several of whom expressed “a strong fear of retaliation by management.”)

‘Whistle-blower Legacy’

On March 31, 2008, Furey transferred to the SEC’s office of inspections and examinations, also in New York. “Furey soon learned that the transfer did not mean she would be free from her whistle-blower legacy,” her complaint says. She was, for example, blocked from consulting with the enforcement staff on matters that her new division had referred to that department.

But her new bosses seemed happy with her performance. “You’re the best,” her supervisor, Thomas Biolsi, wrote Furey after she completed one project. In her 2008 performance evaluation, Biolsi told her she was “on track” for a promotion, according to her complaint.

After Biolsi left the SEC in August 2009, Furey started reporting to James Capezzuto, the acting associate director of the New York office. In December 2009, Capezzuto recommended Furey for a merit-pay increase. He also told her he would support her for a promotion. In November 2010, he wrote in her annual evaluation that she was “an intelligent, hard-working person who honestly cares about her work.” She continued to take on more responsibilities, including those of the position she sought through a promotion. Capezzuto told Furey he had recommended her promotion to Canellos, who became the head of the New York office in July 2009.

Concerned that her role as a whistleblower might derail her advancement, Furey met with Canellos on Sept. 29, 2010. He told her that the enforcement division was “holding a grudge” against her for going to Kotz and claiming that Stepaniuk refused to pursue cases against investment managers. Canellos told her the episode had hurt her chance for a promotion, the complaint says.

In May 2011, Furey applied for a so-called desk audit -- an independent review of her work -- to show that she was already doing the job that she believed Canellos and others were denying her. Capezzuto, her new boss, helped her with the application and made suggestions for its improvement.

Perfect Score

Furey scored 1,760 points on the desk audit, a perfect grade, and the auditor “unequivocally recommended” that Furey be promoted, according to the complaint.

Finally, in July 2011, Capezzuto told Furey “he had lied to her over the past year about recommending her promotion to Canellos because he understood that Canellos would never agree to the promotion,” according to the complaint.

Furey, frustrated with her difficulty getting a copy of her desk audit, contacted Kotz, the SEC’s inspector general, a second time on Oct. 19, 2011, to complain that she was a victim of retaliation for testifying during his internal investigation. Kotz helped Furey get her desk audit, which revealed her to be highly qualified for the promotion, though Canellos denied it to her all the same, according to her complaint. Furey remains at the SEC, working at a job with a lower level of responsibility than she once had.

John Nester, an SEC spokesman, declined to comment on a pending Freedom of Information Act request by Furey, which is how her complaint became public. Nester pointed me to Kotz’s 2008 report and to a list of 14 lawsuits the SEC brought against investment advisers during the years Furey worked in the enforcement division, although none of them was pursued by Stepaniuk just as Furey had alleged in her complaint. Dever, Stepaniuk, Biolsi, Capezzuto and Canellos didn’t respond to requests for comment.

One of the more astounding things about Kathleen Furey’s tale is that she filed her complaint against the SEC with the U.S. Office of Special Counsel -- an independent federal agency with a mandate to protect whistleblowers from retaliation -- in January 2012. She amended it on April 17, five days before Mary Jo White promoted Canellos to become the SEC’s co-director of enforcement. With these allegations out there, I have to wonder if it was a good idea to name Canellos without first addressing the issues raised in Furey’s complaint.

For all I know, Furey is just a disgruntled employee and her allegations are baseless. But in my experience it is the rare employee in any profession who risks losing a job by publicly questioning the behavior of supervisors.

There is a larger issue. Will White live up to her promise to fix the agency? Or will she follow the pattern of her two most recent predecessors and succumb to Wall Street interests? For the sake of fairness, justice and the proper functioning of our capital markets, let’s hope White does the right thing.

(William D. Cohan, the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres, Merrill Lynch and JPMorgan Chase. The opinions expressed are his own.)

To contact the writer of this article: William D. Cohan at wdcohan@yahoo.com

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net or