Jeff Smith 4 p.m., Dec. 20
Dodd-Frank Protects SEC from Releasing Information
The Securities and Exchange Commission was born in the 1930s to protect the public from Wall Street predators. Now it protects Wall Street predators from the public. Examples abound: Bernard Madoff, Pequot, Bear Stearns, etc. Now, San Diegan Gary Aguirre, who personally forced the SEC, kicking and screaming, into pursuing insider trading by the Pequot hedge fund, is pointing out that tucked away in the Dodd-Frank financial reform act that has passed is a measure barring the public's access to SEC records of situations in which the agency derailed an investigation. Although Dodd-Frank sings the praises of transparency and full disclosure, Section 9291 exempts the SEC from Freedom of Information Act (FOIA) access to records under three important securities acts. Already, the SEC releases information in only 13% of FOIA requests, versus 60% in other agencies, says Aguirre.
On June 29, the SEC agreed to pay $775,000 to Aguirre. It had fired him for wanting to pursue Wall Street powerhouse John Mack for possibly passing inside information to the hedge fund Pequot. Two Senate committees and the SEC's inspector general studied the matter and concluded that the SEC was wrong and Aguirre was right. Then Aguirre kept gathering information on Pequot until May of this year, when the SEC finally nailed the hedge fund, which forfeited $28 million. But Mack is still free, and powerful as ever.
Aguirre had spent three years and thousands of dollars in legal fees to exonerate himself. "Under the SEC's broad new exemption, a court would likely deny access to the Pequot records which I obtained through the court proceedings," he says.
More like this:
- Dodd-Frank Gives SEC Exemption from Providing Documents — Sept. 16, 2010
- SEC Pays Gary Aguirre Big Sum, but More Cleansing Needed — June 29, 2010
- SEC Got 45 Complaints on Ex-Hedge Fund Pequot, Target of Gary Aguirre — Aug. 11, 2009
- Investigated Hedge Fund to Close; San Diegan Provided Information — May 27, 2009
- Self-Probe? Ha! — Jan. 21, 2009