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The Securities and Exchange Commission's inspector general has concluded that the SEC should consider disciplining three officials who kept San Diegan Gary Aguirre, formerly of the SEC staff, from interviewing a top Wall Street official in an insider trading investigation. The story was reporrted in this morning's (Oct. 7) New York Times. The recommendation goes right to the heart of today's strong criticism of the SEC: the agency favors Wall Street's top officials, permitting large law firms to thwart investigations of the richest malefactors. In this case, Aguirre wanted to interview John J. Mack, chief executive of Morgan Stanley. Aguirre was investigating possible insider trading by a hedge fund, and wondered if Mack had played a role. Aguirre was fired and Mack was not interviewed until three days after the statute of limitations had passed. The SEC's handling of the matter "raised serious questions about the impartiality and fairness" of the SEC investigation, said H David Kotz, the commission's inspector general. Kotz condemned the "common practice" of giving outside lawyers' clients access to high-level SEC officials when there are complaints about investigators -- exactly what happened in Aguirre's case. The Senate Finance Committee earlier looked into the matter and exonerated Aguirre. Charles E. Grassley, Republican of Iowa, who held hearings on the incident, said, "Gary Aguirre told it like it was and lost his job. Today we're paying the price for an SEC culture of deference to Wall Street." There is a similar case with a local twist. As it became obvious that Peregrine Systems would crash and burn in massive fraud, former Chairman John Moores hired his personal lawyer to spearhead an investigation. It was done by the law firm of Latham & Watkins, which of course said Moores was not at fault. The SEC official handling the case lauded the Latham & Watkins study. Then he went to work for Latham & Watkins. This is how it works at the SEC. Lawyers at the agency let malefactors off the hook, then get fat jobs with their law firms. Gary Aguirre is writing a book that should expose this "revolving door" fraud.
The Securities and Exchange Commission's inspector general has concluded that the SEC should consider disciplining three officials who kept San Diegan Gary Aguirre, formerly of the SEC staff, from interviewing a top Wall Street official in an insider trading investigation. The story was reporrted in this morning's (Oct. 7) New York Times. The recommendation goes right to the heart of today's strong criticism of the SEC: the agency favors Wall Street's top officials, permitting large law firms to thwart investigations of the richest malefactors. In this case, Aguirre wanted to interview John J. Mack, chief executive of Morgan Stanley. Aguirre was investigating possible insider trading by a hedge fund, and wondered if Mack had played a role. Aguirre was fired and Mack was not interviewed until three days after the statute of limitations had passed. The SEC's handling of the matter "raised serious questions about the impartiality and fairness" of the SEC investigation, said H David Kotz, the commission's inspector general. Kotz condemned the "common practice" of giving outside lawyers' clients access to high-level SEC officials when there are complaints about investigators -- exactly what happened in Aguirre's case. The Senate Finance Committee earlier looked into the matter and exonerated Aguirre. Charles E. Grassley, Republican of Iowa, who held hearings on the incident, said, "Gary Aguirre told it like it was and lost his job. Today we're paying the price for an SEC culture of deference to Wall Street." There is a similar case with a local twist. As it became obvious that Peregrine Systems would crash and burn in massive fraud, former Chairman John Moores hired his personal lawyer to spearhead an investigation. It was done by the law firm of Latham & Watkins, which of course said Moores was not at fault. The SEC official handling the case lauded the Latham & Watkins study. Then he went to work for Latham & Watkins. This is how it works at the SEC. Lawyers at the agency let malefactors off the hook, then get fat jobs with their law firms. Gary Aguirre is writing a book that should expose this "revolving door" fraud.