San Diego Fringe: Scenes From Mars One: Now With 68% Less Gravity! and Los Dorados (The Golden Ones)
David Dixon 10:30 a.m., July 28
Today (Feb. 1) in Rolling Stone online, author Matt Taibbi asks more probing questions about the fitness of Mary Jo White, lawyer with a white shoe law firm, to be head of the Securities and Exchange Commission (SEC), as President Obama desires. Once again, Taibbi looks at White's role in the firing of San Diego's Gary Aguirre for wanting to follow an extremely obvious path of possible insider trading tips passed by a Wall Street lion, John Mack. This sordid story has been covered by Taibbi and by the Reader for several years, but new information has surfaced.
To recap: Mack went to Switzerland to interview for a top job with Credit Suisse First Boston. It was the investment banker for Heller Financial, which was going to be acquired by General Electric. But that was a secret at the time. Mack was close to Pequot Capital; Pequot's Art Samberg met with his old friend, Mack. Immediately afterward, Pequot started buying Heller stock, even though Pequot had never researched Heller. Pequot raked in $18 million and Mack was cut in to a deal that netted him $10 million. Aguirre wanted, logically, to interview Mack. White, then with the fraud defense law firm of Debevoise and Plimpton, went to the head of enforcement and got the matter taken care of. The lawyer handling the case for the SEC, Paul Berger, was offered a multi-million job at Debevoise and Plimpton. While still at the SEC, he fired Aguirre. Later, two congressional committees and the SEC's inspector general vindicated Aguirre, who got a $755,000 wrongful termination settlement from the agency.
Taibbi points out in his article today that when she was being deposed by the SEC's in-house investigator, she said she had been worried that Berger was too aggressive. She wondered if such aggressiveness "could leave resentment in the business community or in the legal community that would hamper his ability to function to function well in the private sector." Aggressiveness by a regulator is "a positive thing in government, to a point," declared White.
Says Taibbi, "Given that we now know that she knows that firms like hers value regulators who can avoid creating 'resentment in the business community,' and retain their ability to 'function in the private sector,' I think it's safe to expect that White's SEC will take very good care to bring cases, but only 'to a point.'"
And that's exactly what the SEC does NOT need, in my opinion. Much of Wall Street's corruption can be laid at the feet of a namby-pamby -- and often corrupt -- SEC, as the Pequot/Aguirre/White misadventure shows. If Obama is serious about cleaning up Wall Street, he doesn't want a lawyer from a white shoe law firm who thinks regulators should be aggressive "to a point." The SEC should have lawyers who are aggressive "to the core."