Second SEC Critic Of Mack Probe Testifies

Dec 5 2006 | 11:51am ET

A Senate committee today will hear two sides of the John Mack-Pequot Capital Management insider trading story, with a Securities Exchange Committee official set to defend the agency’s firing of one lawyer, while another may corroborate his claims.

SEC enforcement chief Linda Thomsen will tell the Senate Judiciary Committee—headed until January by hedge fund foe Sen. Arlen Specter (R-Pa.)—that Gary Aguirre’s allegation that he was fired for getting to close to Mack in his investigation of Pequot, Reuters reports. According to Thomsen’s prepared testimony, Aguirre was sacked on Sept. 1, 2005, for “inability to work effectively with other staff and his unwillingness to operate within the Securities and Exchange Commission process.”

But further doubt may be thrown on the SEC’s handling of the Pequot investigation by investigator Eric Ribelin, who is still at the Commission. The New York Times reports that Ribelin asked to be removed from the Pequot case because he was concerned about decisions being made by senior SEC officials. In an e-mail to a supervisor, the Times reports, Ribelin wrote, “Something smells rotten here.” Ribelin is set to testify before Specter’s committee today, as well.

Last week, Sen. Charles Grassley (R-Iowa) said that his Senate Finance Committee’s probe has been “supportive” of Aguirre’s claims, though he did not specify to which of Aguirre’s accusations he referred.

Prior to his dismissal, Aguirre was praised by superiors for his work and even given a raise just days before his firing.

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