Senators, Whistleblower Blast SEC Report On Pequot Probe

Nov 11 2008 | 9:18am ET

The Securities and Exchange Commission’s chief administrative law judge has found herself under fire after she exonerated two top officials for their handling of an investigation of hedge fund Pequot Capital Management.

Brenda Murray, in a 15-page report issued last week, found that Linda Thomsen, the agency’s director of enforcement, and Robert Hanson, the direct supervisor of would-be whistleblower Gary Aguirre, did not botch the probe of insider trading at Pequot and should not be disciplined. Her findings stand at loggerheads with those of the SEC’s inspector general, who last month blasted the Pequot investigation and called for Thomsen, Hanson and Mark Kreitman, assistant director of enforcement, to be punished.

H. David Kotz was among those adding his voice to a chorus of criticism of Murray’s decision, which was not rendered in her role as an administrative law judge. Instead, she was charged by Diego Ruiz, the SEC’s executive director, to review Kotz’s report.

“We have serious concerns about the process utilized in arriving at these decisions,” Kotz said in a statement.

Aguirre, who claims he was fired for seeking to take testimony from John Mack, who served as chairman of Pequot before becoming CEO of Morgan Stanley, accused his former employer of cynically using Murray to give the impression that the decision not to discipline Thomsen and Hanson—Murray said a decision on Kreitman would come later—carries more weight than it does.

“The SEC has spun this as if Murray was acting as a judge,” he said. “She was not.”

Aguirre’s champions on Capitol Hill, Sens. Arlen Specter (R-Pa.) and Charles Grassley (R-Iowa), also took umbrage at the second SEC report. The senators said that Murray’s report reads as though “the lawyers for the wrongdoers” helped write it. Spector, echoing Kotz’s report, added, “it was pretty clear that Aguirre was fired because he was the whistleblower.”

The SEC rejected the criticism of the Murray report, calling it thorough and objective.

 


In Depth

The Benefits Of Private Debt Investing

May 7 2015 | 10:43am ET

Jeffrey Haas is chief operating officer of Old Hill Partners Inc., an SEC-registered...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

How To Generate 6% Yield In A Volatile World

May 22 2015 | 6:41am ET

Private credit comes in many different flavors, all with the common themes of over...

 

Editor's Note