He was released on police bail pending further inquiries.
His solicitor, Neil Logan, said: "Mr McConaghie has not been charged with any criminal offence."
DUP Upper Bann MP Mr Simpson said: "The police are currently investigating issues pertaining to an individual brought to their attention by myself.
"I no longer employ this individual and he does not hold any office in the party.
"No further comment will be made on the matter."
Mr McConaghie was employed by the party as an election agent, although he stopped his membership some time ago.
Mr Simpson contacted police in September when a camera was found inside a toilet cubicle at the MP's office in Portadown, Co Armagh.
Mr McConaghie had trained to become a minister in the Free Presbyterian Church -- which was started by the Rev Ian Paisley -- although he has no congregation.
He had previously been a minister in the Elim Pentecostal Church.
He has also been a member of the Independent Orange Order and a press officer for the Free Presbyterian Church.
A spokesman for the Police Service of Northern Ireland said: "On September 25, police received a report of an incident at premises in the Thomas Street area of Portadown.
"A 47-year-old male was later arrested and has since been released on bail pending further inquiries."