SEC Inspector General To Be Investigated Over Allegations Of Sexual Misconduct

* SEC has received complaint about misconduct in OIG

* SEC says it is also referring matter to CIGIE for review

* Allegation comes as SEC searches for new top watchdog

* Prior watchdog left amid criticism, complaints

By Sarah N. Lynch

WASHINGTON, May 8 (Reuters) - The U.S. Securities and Exchange Commission is hiring an outside investigator to look into allegations of misconduct by current and former employees in the SEC's Office of the Inspector General, agency spokesman John Nester said.

The allegations, which were reported by Bloomberg on Monday, come to light as the SEC continues its search for a new inspector general after its former watchdog David Kotz departed in January.

Nester would not discuss any details about the allegations of misconduct, which he said had been raised by "an individual."

He said the SEC had also referred the matter to the Council of Inspectors General on Integrity and Efficiency, or CIGIE, a government council that monitors the work of 73 inspectors.

This is not the first time the SEC's inspector general's office has faced complaints.

In December, Reuters reported that two SEC employees filed formal complaints against Kotz in 2011, alleging he bullied witnesses and twisted facts to build a case against them.

Kotz was known as an aggressive inspector general, who probed everything from the agency's failure to catch convicted Ponzi swindler Bernard Madoff to bungled SEC contracts and even pornography-watching by agency employees.

But many of his critics say his hard-hitting tactics also helped to fuel a culture of fear within the agency.

In addition to the complaints reported by Reuters, Bloomberg also previously reported about concerns of potential conflicts of interest after Kotz did a sit-down interview with a financial adviser who markets a "crash-proof retirement plan" through the Internet and a paid radio show.

The adviser later sold Kotz three tickets to a sold-out football game, B loomberg said.

Kotz's departure from the SEC earlier this year took many by surprise.

He now works at Gryphon Strategies, a private investigative services firm.

He was not immediately available to comment on the latest allegations of misconduct out of the inspector general's office.

Since he left, deputy inspector general Noelle Maloney has been serving as interim inspector general while the SEC searches for a replacement.

She did not immediately respond to a request for comment.