Two U.S. Securities and Exchange Commission employees are under investigation by federal criminal authorities for allegedly using insider information to trade stocks, a source familiar with the matter said on Thursday.

A report by the SEC's internal watchdog alleges that the two SEC lawyers traded in stock of a large financial services company despite being told by another SEC employee of ongoing investigations of that company, CBS News reported.

The SEC inspector general report said one SEC attorney under investigation works in the Office of the SEC's Chief Counsel and has access to a tremendous amount of nonpublic information, CBS News said.

An SEC spokesman said: We take seriously even the suggestion that any SEC employee would engage in insider trading. We note that the inspector general report neither accuses any SEC employee of insider trading nor concludes that any such conduct took place.

Calls to the SEC's inspector general and Federal Bureau of Investigation were not immediately returned.

The SEC is in charge of policing markets and protecting investors. Ferreting out individuals who use nonpublic material information to profit on a company's stock has been a priority for the SEC.

The SEC spokesman said the agency has been taking additional steps to enhance its protections against the potential for improper conduct.

(Reporting by Rachelle Younglai; Editing by Gary Hill)

Insider trading