|
|
Gary Aguirre & the SEC
In 2006, Gary Aguirre was involved in a flurry of political and media attention following a front page New York Times article detailing Aguirre’s investigation of a politically-sensitive insider-trading case. Aguirre is a former Securities and Exchange Commission (SEC) lawyer who was dismissed by the agency following his attempt to subpoena John Mack, now the CEO of Morgan Stanley, in an insider trading investigation of Pequot Capital Management, a leading hedge fund. Hedge funds are unregulated private investment funds that typically engage in unconventional investment strategies, such as short-selling. Mack briefly served as the chairman of Pequot before being hired by Morgan Stanley as their CEO. Click here to read the New York Times article! Click here to read GAP's original statement!
In September 2005, Aguirre was fired 11 days after being awarded a two-step pay increase. Since coming to GAP, Aguirre testified at a Senate Judiciary Committee hearing entitled “Hedge Fund and Analysts: How Independent Is Their Relationship?” At the hearing, Committee Chairman Arlen Specter (R-Pa) expressed his outrage at SEC attempts to silence Aguirre, announcing his commitment to investigate further. Aguirre has provided documentary evidence to Congress which support his assertion that Mack should have been subpoenaed to take his testimony.
Aguirre’s battle dates back to June 2005, when he suddenly encountered resistance at the SEC during the course of his investigation of Pequot. A $7 billion hedge fund, Pequot’s CEO is Arthur J. Samberg, a long time friend of Mack. Prior to that date, Aguirre had been investigating the case for months, issuing over 90 subpoenas without obstruction.
When Aguirre recommended that Mack’s testimony be taken under oath, Aguirre was told by his supervisor that it would be difficult to obtain approval for the subpoena due to Mack’s powerful “political connections.” Over the course of the next two months, Aguirre’s supervisors refused to allow him to issue Mack a subpoena. Aguirre questioned this decision at every level up the chain of command (including SEC Chairman Christopher Cox), reporting his superior’s behavior and providing evidence supporting his subpoena request.
In a stunning reversal in the months after the New York Times story broke, the SEC interviewed Mack in connection with the insider trading investigation of Pequot, validating Aguirre’s assessment.
Additionally, the SEC Inspector General (IG) reopened an investigation into Aguirre’s allegations of SEC favoritism and retaliation. In an earlier investigation, the IG concluded, without interviewing Aguirre, that the SEC did not wrongly fire him.
On July 14, 2006, Aguirre filed a FOIA complaint in the District Court of the District of Colombia against the SEC. Through the FOIA complaint, Aguirre hopes to compel the SEC to release certain documents that will demonstrate which SEC officials were responsible for authorizing the apparent favoritism on behalf of Mack. Aguirre also hopes to obtain documentation which will assist the Senate in its investigation of possible corruption at the SEC.
This case reveals the great need for continued oversight of both the SEC and hedge funds, which control an estimated $2.4 trillion in assets. GAP urges Senate committees to continue investigating possible corruption at the SEC as well as the hedge fund industry.
Updates on Aguirre:
August 8, 2007: Aguirre Victory
A report released last Friday by the Senate Finance and Judiciary committees represents a significant victory for Gary Aguirre, the S.E.C. staff attorney who was fired two years ago following his attempt to subpoena John Mack, now the CEO of Morgan Stanley, in an insider trading investigation of Pequot Capital Management, a leading hedge fund.
Click here for the New York Times story.
Click here to read the Senate committees' final report.
January 2007: Interim Senate Report Supports Aguirre
The case of GAP client and former S.E.C. investigator Gary Aguirre scored a tremendous victory. In an interim Senate report released by Sen. Charles Grassley (R-Ia.) and Sen. Arlen Specter (R-Pa.), according to the New York Times, "the Securities and Exchange Commission mishandled its inquiry into suspect trades by a prominent hedge fund, then may have tried to cover up those mistakes after its chief investigator on the case complained."
Furthermore, the New York Times stated that the report "also asked the S.E.C. or the Justice Department to consider investigating whether false testimony was given to S.E.C. officials who examined the hedge fund, Pequot Capital Management."
December 2006 -- A new wave of media attention focused on Aguirre as he, along with SEC officials, testified before the December 5th Senate Judiciary Committee in a hearing titled "Examining Enforcement of Criminal Insider Trading and Hedge Fund Activity."
Aguirre's case was corroborated by another witness's testimony, according to the Associated Press. That outlet wrote: "...another SEC official, appearing at the same Senate Judiciary Committee hearing, bolstered the claims by fired attorney Gary Aguirre. 'I have serious misgivings about many of the decisions made in this investigation. Something smells rotten.'" According to the AP, the official made that statement in an e-mail to a supervisor in September 2005.
Click here to read Part 1 of Aguirre's testimony!
Click here to read Part 2 of Aguirre's testimony!
October 2006 -- GAP released the following announcement:
"The Government Accountability Project applauds the actions of the Government Accountability Office in announcing a wide-ranging review into various practices of the SEC. This action comes on the heels of Senator Charles Grassley's letter to the GAO asking for the review, written after the senator became familiar with the case of Gary Aguirre. GAP hopes there will be a complete airing of the issue in the future."
Click here to read the 10/27 New York Times article about the GAO investigation of the SEC!
Click here to read the 10/25 New York Times editorial on the Aguirre case!
Click here to read the 10/22 New York Times article on the Aguirre case!
8/15/06 -- Grassley and Specter Send Letter to Cox! - Senator Grassley and Senator Specter have sent a letter to SEC Chairman Cox questioning the handling of the SEC IG investigation into Gary Aguirre's charges of political favoritism in enforcement decisions at the SEC. Click here to read the New York Times article!
7/24/06 -- Gary Aguirre submits a letter to the Senate Committee on Banking, Housing, and Urban Affairs regarding the committee's hedge fund hearing.
7/21/06: The SEC has requested that John Mack, the CEO of Morgan Stanley, be interviewed regarding Gary Aguirre's investigation of Pequot Capital Management. The SEC has also reopened its investigation into Aguirre's allegations of favoritism and retaliation. Click here to read GAP General Counsel Joanne Royce's statement regarding today's SEC actions.
7/14: Gary Aguirre files a Freedom of Information Act (FOIA) complaint against the Securities and Exchange Commission (SEC) in order to compel the SEC to produce documents relating to the SEC’s termination of Aguirre.
|
|
 |
