Two Senators Say Report Paints Picture Of ‘Troubled Agency’ February 1, 2007Posted by notapundit in Congress, Politics, US News.
WASHINGTON (Dow Jones)–Two Republican senators Wednesday said the results of a preliminary investigation have cast doubt on the U.S. Securities and Exchange Commission’s handling of an insider-trading probe and suggest that reforms may be needed.
“These findings paint a picture of a troubled agency that faces serious questions about public confidence, the integrity of its investigations, and its ability to protect all investors, large and small, with an even hand,” said Sen. Charles Grassley, R-Iowa., in remarks on the Senate floor.
Sen. Arlen Specter, R-Pa., echoed comments he made last year and said that “at best, the picture shows extraordinarily lax enforcement by the SEC and it may even indicate a coverup by the SEC.”
The lawmakers made the statements as they formally submitted an interim report based upon their findings. The report wasn’t immediately available. Grassley said that the final report would be issued soon and would make recommendations to the SEC.
SEC spokesman John Nester said that “we have not yet had the opportunity to read the interim final report, but we respect and appreciate the oversight role of the Congress and we have fully cooperated at every stage of the review. We will carefully consider the report’s findings and recommendations.”
A former SEC enforcement attorney, Gary Aguirre, has said that he was conducting an insider-trading investigation of hedge fund Pequot Capital Management Inc. and that he sought to interview John Mack, who is a close friend of Pequot’s chief, Arthur Samberg. Aguirre had suspected Mack of tipping off Pequot.
Aguirre has claimed that he was fired after his investigation got too close to Mack, who currently leads investment bank Morgan Stanley (MS). The SEC has already denied that Mack’s “political clout” shielded him from questioning in an insider-trading investigation.
The SEC last year formally closed its probe into Pequot and Mack without recommending enforcement action.
“We hope that the SEC will reopen its investigation,” Specter said.
By Siobhan Hughes, Dow Jones Newswires