It gets even worse. One reason the Pequot case is being reopened is that a divorce suit has revealed that the hedge fund agreed to pay $2.1 million to a former Microsoft employee who was apparently feeding information on his former employer. “Pequot made a boatload of money” betting on Microsoft securities, based on such information, says Aguirre, but the agency found a way to drop the Microsoft angle of the investigation. But Aguirre has come up with new facts that have forced the agency to reopen the probe.
There’s more: In the same report in which she cleared Aguirre’s nemeses, Brenda Murray vindicated an agency official who closed an investigation into the derivatives dealings of Wall Street’s Bear Stearns in 2007. Early the next year, the Wall Street firm was rescued from bankruptcy when it was forced into J.P. Morgan, backed by $29 billion of federal money. Bear’s derivatives gambling was to blame. The agency missed it and then exonerated itself.
And the agency is going to look into whether it did its job properly in the Madoff case? Come now.