No Discipline For SEC Officials In Pequot Probe

Nov 10 2008 | 1:23am ET

Three high-ranking Securities and Exchange Commission officials will not be disciplined for lapses in the agency’s investigation of insider trading at Pequot Capital Management.

The SEC’s chief administrative law judge, Brenda Murray, declined to order punishment for Linda Thomsen, director of enforcement, and two others in the case of Gary Aguirre, a former SEC lawyer who claimed he was fired for seeking to question John Mack, the one-time Pequot chairman who now leads Morgan Stanley. In a report issued last month, H. David Kotz, the SEC’s inspector general, blasted the SEC’s probe of Pequot, saying he found evidence that “raised serious questions about the impartiality and fairness” of the investigation, and that the agency had allowed “inappropriate reasons to factor into its decision to terminate” Aguirre in 2005.

He had called for disciplinary action against Thomsen, Mark Kreitman, the SEC’s assistant director of enforcement, and Robert Hanson, Aguirre’s former supervisor. But Murray dismissed his recommendations.

“We are surprised and disappointed by the administrative judge’s decisions,” Kotz said in a statement. “We believe her findings were flawed and not supported by the evidence. We also have serious concerns about the process utilized in arriving at these decisions. We stand by our comprehensive and through reports 100%.”

Aguirre said he was fired when he asked to take testimony from Mack. He also claimed that his superiors sought to impede his investigation when it got close to Mack.

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