NYT/AP: S.E.C. Lawyer Claims Firing Over (aggressive) Hedge Fund Inquiry

[DeepModem Mom]

S.E.C. Lawyer Claims Firing Over Fund Inquiry
By THE ASSOCIATED PRESS
Published: June 28, 2006

WASHINGTON (AP) -- A former government attorney told Congress on Wednesday that he was fired for investigating a hedge fund too aggressively and said law enforcement is failing in its duty to protect investors in the growing hedge fund industry.

Gary Aguirre, who led the Securities and Exchange Commission's investigation of a major hedge fund for possible insider trading, was fired from his job by the SEC last summer. Aguirre says he was blocked by superiors when he tried to question a prominent Wall Street executive in the probe of Pequot Capital Management Inc.

Aguirre, who spoke at a hearing of the Senate Judiciary Committee, also said the SEC had told him he would risk violating the law by testifying on the matter because details of a pending investigation could be made public.

''Fixing the SEC so it can protect investors and capital markets from hedge fund abuse will not be an easy task,'' Aguirre said in testimony submitted for the hearing. ''Powerful interests want the SEC to stay just the way it is or, better yet, to become even weaker.''

Powerful Wall Street investment banks ''stopped the hedge fund investigation I was assigned to conduct,'' Aguirre charged. ''They cost me my job.''...

http://www.nytimes.com/aponline/business/AP-Hedge-Funds.html

[UpInArms]

1. this is a very BIG deal -

this, imho, is probably just the edge of something that is as large as the BCCI cover-up.

[acmejack]

2. It is, that is why they put COX in to do Damage Control

He is hand picked to do nothing. And that is exactly what he has done.

[seafan]

3. Did y'all catch this, near the end?

Aguirre says his firing by the SEC last September was related to his efforts to take testimony in the Pequot probe from John Mack, the chief executive of investment house Morgan Stanley Inc. Mack, a longtime investor in Pequot and a friend of its founder, served briefly last year as the hedge fund's chairman.

snip

SEC officials have denied Aguirre's allegation that Mack was spared from questioning because of his political ties as a major fundraiser for President Bush's campaigns. No one tried to exert improper influence, they have said.

[DeepModem Mom]

5. Thanks for highlighting this, seafan. nt

[appleannie1]

4. some other links

BOSTON (Reuters) - U.S. financial regulators took a one-two punch on Friday that might leave their efforts to regulate the $1.3 trillion hedge fund industry in shambles.

"The regulatory landscape that the SEC has so carefully cultivated is now seriously in question," observed Jedd Wider, a partner at law firm Morgan Lewis.

The U.S. Securities and Exchange Commission will now have to go back to drawing board if it truly wants to put a tighter leash on an industry in which assets have doubled in five years. And that might take a long time, lawyers and investment managers said.

Early in the day, a former SEC lawyer described in detail how the agency last year quashed a probe into possible insider trading at a hedge fund later identified as Pequot Capital Management, one of America's best known funds with $7 billion in assets.

Hours later, a federal appeals court threw out the SEC's rule that required most U.S. hedge funds to register with the agency, thereby allowing SEC auditors to review their books and keep closer watch on them.

"It doesn't sound like it was a very good day for the SEC," said Richard Goldman, a partner at law firm Bingham McCutchen.
http://www.freerepublic.com/focus/f-news/1655196/posts

And the Government Accountability Project
http://209.200.93.225/content/press_detail.cfm?press_id=516

This could turn into something big.

[DeepModem Mom]

8. Thanks, appleannie!

[TexasLawyer]

6. Just like Enron

only the stakes are way higher.

[TexasLawyer]

7. More details

CEO likely tipped Pequot in advance of trades: ex-SEC lawyer

By Robert Schroeder
Last Update: 9:30 AM ET Jun 28, 2006

WASHINGTON (MarketWatch) -- Evidence suggests that a former CEO of a big Wall Street investment bank improperly tipped the chief of hedge fund Pequot Capital Management and helped the fund illegally reap profits of $18 million, a former Securities and Exchange Commission attorney said Wednesday.

In prepared testimony for a Senate Judiciary Committee hearing, ex-SEC attorney Gary Aguirre repeated explosive claims made to Congress: that the SEC, the government's top cop for Wall Street, quashed his probe into insider trading at Pequot when his leads got too close to a politically connected Wall Street chieftain. Aguirre doesn't name the investment bank chief in his testimony. But the chief is reported to be John Mack, head of Morgan Stanley.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BC89107E0%2D9009%2D4376%2DABB2%2D0531826D0E33%7D&dist=newsfinder&siteid=google

[DeepModem Mom]

9. Thanks, TexasLawyer!