An SEC employee who fought for years to get the agency to stop an alleged massive Ponzi scheme told a House panel that she “paid a heavy price” for protesting her boss’s weak approach to exposing such scams.

In prepared testimony on Friday, Julie Preuitt, a longtime employee in the Securities and Exchange Commission’s Fort Worth office, said she was given a letter of reprimand and in 2008 was reassigned to report to a regional director “who would at times go weeks or even months intentionally avoiding any contact with me.”

She said she interpreted her transfer as an effort to drive her out of the agency, and she argued that the move was “part of a cultural problem” that continues to undermine the SEC’s effectiveness.

Preuitt was called to testify before the oversight panel of the House Financial Services Committee on the SEC’s failure to stop Robert Allen Stanford’s alleged $7.2 billion Ponzi scheme. The SEC’s bungling of the Stanford case and the alleged retaliation against Preuitt were the subject of news stories and SEC inspector general reports almost a year ago. House Republicans revisited the subject Friday against the backdrop of a largely partisan battle over how much funding the agency should receive.

Democrats have generally argued that the agency needs a substantial budget increase to prevent more big financial frauds and crises like the 2008 meltdown that left the nation’s economy reeling.

Some Republicans have countered that the agency’s past failures render it undeserving of such a funding boost. They have invoked such embarrassments as the SEC’s failure to stop Bernard Madoff’s Ponzi scheme and a scandal in which agency employees were viewing pornography at work.

On Friday, Republicans pressed SEC officials on such sore points as the revolving door between the agency and the industry it oversees and a wasteful SEC office lease.

The SEC didn’t need a bigger budget or more regulations to stop Stanford’s alleged scam, Rep. Randy Neugebauer (R-Tex.), chairman of the oversight and investigations subcommittee, said. The problem was that “people just didn’t do their job,” he said.

The Stanford case was in a sense more egregious than the Madoff fraud because SEC employees recognized for years that Stanford might be running a Ponzi scheme, Neugebauer said.

Preuitt reviewed the Stanford Group in 1997 and concluded that Stanford’s stated financial returns were “absolutely ludicrous,” SEC inspector general H. David Kotz said in testimony Friday. The SEC then flagged Stanford Group as a “possible Ponzi scheme,” Kotz said.

In the years that followed, SEC examiners repeatedly pressed the agency to investigate, but the SEC enforcement staff made little if any meaningful effort to do so, Kotz said. Senior officials in Fort Worth thought they were being judged on the number of cases they brought, and they discouraged work on cases that were not quick hits or or slam dunks, Kotz said.

In fall 2007, one of Preuitt’s superiors announced a new type of brokerage examination, “which would consist of interviewing a few senior personnel at brokerage firms over the course of a half day while reviewing limited, if any documentation,” Preuitt said in written testimony. Preuitt said the plan was “nothing short of a subversion of the core mission.”

Her superior, Preuitt said, called the plan part of the emphasis on “numbers.”

When Preuitt was reprimanded, another SEC official who complained about the way Preuitt had been treated was also reprimanded, Preuitt said.

The plan for mini-examinations was ultimately quashed, and the inspector general recommended potential disciplinary action against officials for retaliating against Preuitt and her colleague, she said.

But Preuitt said she is unaware of any disciplinary action, and she has not been restored to her former position.

The SEC took enforcement action against Stanford in 2009, after the Madoff fraud heightened awareness about Ponzi schemes.

Committee member Rep. Bill Posey (R-Fla.) asked SEC officials: “Have we canonized Julie Preuitt yet? ... She should probably be running the agency.”

Carlo di Florio, who heads the SEC examination program, said Preuitt showed the kind of determination the agency encourages, and said that the agency is working to give her new responsibilities.

SEC officials said new management at the agency has addressed the problems that the Stanford matter illustrated.

Rep. Michael Capuano (D-Mass.) objected to any implication that the Stanford story is an argument for loosening regulation.

The attitude that the markets will police themselves and “that somehow regulation is not necessary ... is just wrong,” Capuano said.