Request for Reimbursement of Legal Expenses Incident to Internal Investigation

The Securities and Exchange Commission (SEC) requested a decision concerning its authority to reimburse reasonable attorney's fees paid by its employees. As a result of its own investigation of misconduct charges initially made by a private party, SEC found possible merit to charges against three employees and appointed a hearing examiner who ultimately determined the misconduct allegations to be without merit. SEC may not reimburse attorney's fees incurred by the employees as a cost of providing legal representation. Upon the determination to pursue the matter, the case was no longer one in which the Government's interests were aligned with those of the employees in defending charges brought by a third party against the employees for conduct within the scope of their official responsibilities. Attorney's fees may be awarded to the prevailing party only when there is express authority for their payment.