Although this story is slightly outside of our niche, it is still particularly interesting. Republicans have come out swinging today, claiming that the SEC (Securities and Exchange Commission) was too busy watching pornography to properly police the nation's financial system as it collapsed in 2008.

Says California Rep. Darrell Issa, the head of the House Oversight and Government Reform Committee: "It is disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation's economy on the brink of collapse."

The SEC internally had talks with 33 employees that were caught looking at "explicit images" over the past five year, all on their government-issued computers. 31 of those problems have come since 2008, when the stock market and the nation's financial system almost came full crashing down thanks to billion dollar losses caused by derivatives.

The SEC Inspector General, in response to a probe by Republicans, added some incredible findings to the already devastating situation.

Reads the Chicago Tribune:

-- A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign.

-- An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "Pornography." Yet he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense, and received a 14-day suspension.

-- Seventeen of the employees were "at a senior level," earning salaries of up to $222,418.

-- The number of cases jumped from two in 2007 to 16 in 2008. The cracks in the financial system emerged in mid-2007 and spread into full-blown panic by the fall of 2008.

A report in 2006 showed that around 16 percent of all men with work Internet access admit to watching porn at some point, while at work.

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After HTC dropped out of the hunt, it appears that Lenovo is now the front-runner to purchase struggling smartphone maker Palm.

Lenovo is the world's fourth largest PC maker, but has struggled to make any headway into the phone market.

"A most suitable candidate will be a mainland Chinese company," adds Lu Chialin, an analyst at Macquarie Securities in Taipei. "They've got a lot more free cash and don't have the brand presence in the United States, so that will all give them that boost they need."

HTC passed on bidding after reviewing Palm's balance sheet and books, leaving Lenovo as the top "mainland Chinese" company left in the running.

"There just weren't enough synergies to take the deal forward," says an anonymous HTC source, via Reuters.

Officials from all three companies declined to comment.

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The German airline Lufthansa has said today it would fly Apple developer Gray Powell (the guy who lost the iPhone HD) to Munich for free beers, on them.

Nicola Lange, the airline's director of marketing and customer relations says she knows "how frustrating it can be to lose personal items, especially when it is such a unique item." Also, because Powell lost the phone in a Beer Garden, Lange says he "can literally pick up where you last left off," after he flies to Germany.

Powell has yet to take up the offer, but he likely should, given how mad CEO Steve Jobs most likely is at Apple's latest product being leaked months before launch.

New to the "iPhone HD," are a front-facing camera for video conferencing, a better standard camera (including larger lens and flash), a Micro-SIM slot (just like the iPad), 960x640 resolution, a second mic, metallic exterior (not plastic) and split side buttons for volume.

The form factor is very different as well. The back is flat and not rounded, slightly smaller screen, a more "square" design all around with less wasted space, a larger battery, and smaller internal components.

Gray Powell was one of a few developers that was given the prototype to test "real-world conditions."

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According to Bloomberg, Microsoft and ex-News Corp. president Peter Chernin are discussing creating a TV channel dedicated to the Xbox 360 gaming console.

The channel would be available only to Xbox Live Gold subscribers, which may see its monthly price rise by $1 for the added programming.

The "Xbox TV" channel would be owned by Chernin and Microsoft jointly, and the channel would offer original programming as well as reruns.

Chernin's publicist would not comment but to say: "Peter is talking to lots of people about lots of ideas in the digital space." Microsoft declined to comment.

The former president stepped down from News Corp. in June, and took a film and production deal with Twentieth Century Fox.

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Wedbush Morgan video game analyst Michael Pachter has said today that he expects video game consoles to add 3 million subscriptions to Netflix in 2010.

Netflix gained about 800,000 subscribers in 2009 after they made the streaming service available on the Xbox 360 and Pachter says he expects at least the same amount of additions from the PS3 and Wii.

After Netflix's recent earnings report, Pachter said (via GI): "Subscriber growth exceeded our expectations in Q1. And the company increased full year subscriber guidance by 1 million, implying that contribution from the consoles may be running closer to 3 million this year."

Overall, 55 percent of those with Netflix subscriptions are now "actively" streaming content, up from 48 percent last year.

Additionally, Pachter says that once the current installed base of consoles has been saturated by Netflix, Netflix will make subscribers of about 5-to-10 percent of all new console purchases for the year, expected to add up to 1 million for all three consoles.

Finally, the analyst says that he expects the Netflix streaming to be much less popular on the Wii, given the small number of Internet-connected users on the console and the lack of HD or even pseudo-HD.

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A group of hackers with the group name "SkidRow" have announced today that they have found a way to completely circumvent Ubisoft's "always on" DRM, DRM that forces gamers to remain connected to the Internet at all times or lose the ability to play their legitimately purchased game.

The controversial DRM was implemented first in Assassin's Creed II and Silent Hunter 5 but Ubisoft said recently they would keep the DRM on for all upcoming games.

The new hack (a modified .exe) by SkidRow disables the DRM entirely and allows for users to play their game without worrying about losing their progress if their Internet cuts out for a second.

As an extra poke at Ubisoft, the .NFO file attached to the hack says: "Thank you Ubisoft, this was quite a challenge for us, but nothing stops the leading force from doing what we do. Next time focus on the game and not on the DRM. It was probably horrible for all legit users. We just make their lives easier."

Maybe Ubisoft will get the hint.

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Microsoft's Entertainment division, which includes the Xbox 360, Zune and PC software has shown a strong profit for the Q1 2010, along with larger revenue.

The company saw a rise in revenue to $1.67 billion from $1.63 billion year-on-year, and showed a profit of $165 million USD. Overall, the company had a record month, bringing in $14.5 billion in revenue and $4.01 billion in net profit.

Microsoft sold 1.5 million consoles during the quarter, which was down from 1.7 million for the same quarter in 2009, and 8.8 million consoles in the last nine months, which was down from 10 million in the comparable period a year before.

Despite the drop in sales, manufacturing costs for the 360 fell 22 percent, helping to lead to the strong profit. Sales and marketing expenses fell 6 percent as well, or $60 million. On the other end, R&D costs increased by $31 million, and Xbox Live operating costs increased as well.

Mainly, the growth was attributed to the strong launch of Windows 7, as well as strong growth in Xbox Live revenue.

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Google has denied today that it will be bringing its free Navigation GPS system to the iPhone, squashing rumors that had started earlier in the week.

The rumors had started when a Google executive was quoted as saying the search giant was planning to bring the GPS to unspecified mobile platforms in the future.

"We did not say we would bring it to iPhone, we said to date we've had it on Android and that in the future it may come to other platforms but did not confirm this will be coming to iPhone at all," says Google, via PCWorld.

Maps Navigation, which is completely free and available for Android 1.6-2.1 users, offers 3D maps, turn-by-turn voice navigation, rerouting, real-time traffic, weather and more.

The software also pre-caches the entire route, so if you lose your data connection for a few minutes you can still see your progress towards the destination.

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