Post by kranker on Jun 29, 2006 20:37:58 GMT -4
SEC 'blocked Mack inquiry'
David Whighton
New York
30jun06
A FORMER Securities and Exchange Commission official claimed he was blocked from questioning John Mack as part of an insider dealing probe at the time Mr Mack was being considered as chief executive of Morgan Stanley.
Gary Aguirre, who was sacked from the SEC last September, said a Morgan Stanley official had indicated that Mr Mack could not be appointed chief executive if he was subpoenaed over suspicious trades by Pequot Capital, a $US7 billion ($9.6 billion) hedge fund.
Senior SEC officials subsequently denied him permission to question Mr Mack, Mr Aguirre told a hearing of the Senate judiciary committee.
Mr Aguirre said that Eric Dinallo, Morgan Stanley's head of regulatory affairs, asked the SEC whether the probe would involve questioning Mr Mack.
"Are you going to proceed against Mr Mack? If so, we are going to have problems and don't think he can step in as (chief executive)," Mr Aguirre quoted Mr Dinallo as saying.
"Over the next seven days, I saw this investigation come to a grinding halt," Mr Aguirre said.
Mr Dinallo, who was one of Eliot Spitzer's top lieutenants during the New York attorney general's investigation of Wall Street conflicts of interest, joined Morgan Stanley in 2003 but left to become general counsel at Willis Group in March.
According to Mr Aguirre's account, his SEC superiors changed their position on questioning Mr Mack at the very time that he was being considered as chief executive of Morgan Stanley.
Mr Aguirre said he had attempted to present documented evidence that he thought supported his request to subpoena Mr Mack, but it was rejected by his superior.
"He threw one of the spreadsheets at me physically," Mr Aguirre said.
The Wall Street bank was at the time reeling from the removal of Philip Purcell as chairman and chief executive and there was strong lobbying for his replacement by Mr Mack in the face of initial opposition from some board members.
In a letter to senators, first reported in The New York Times last week, Mr Aguirre said his branch chief, Robert Hanson, at first reacted positively to his suggestion that Mr Mack should be questioned.
But Mr Hanson later blocked the move, stating that it would be difficult to get authority because of the subject's "powerful political connections".
Mr Aguirre said that Mary Jo White, the former New York federal prosecutor who was advising the Morgan Stanley board, talked directly to Linda Thomsen, the SEC's director of enforcement, about the case.
Mr Aguirre wanted to question Mr Mack about whether he tipped off his friend Arthur Samberg, head of Pequot, about a takeover bid.
Pequot said it received no tip-offs from anybody and Morgan Stanley said there was no evidence that Mr Mack engaged in any wrongdoing.
www.theaustralian.news.com.au/story/0,20867,19629461-36375,00.html
David Whighton
New York
30jun06
A FORMER Securities and Exchange Commission official claimed he was blocked from questioning John Mack as part of an insider dealing probe at the time Mr Mack was being considered as chief executive of Morgan Stanley.
Gary Aguirre, who was sacked from the SEC last September, said a Morgan Stanley official had indicated that Mr Mack could not be appointed chief executive if he was subpoenaed over suspicious trades by Pequot Capital, a $US7 billion ($9.6 billion) hedge fund.
Senior SEC officials subsequently denied him permission to question Mr Mack, Mr Aguirre told a hearing of the Senate judiciary committee.
Mr Aguirre said that Eric Dinallo, Morgan Stanley's head of regulatory affairs, asked the SEC whether the probe would involve questioning Mr Mack.
"Are you going to proceed against Mr Mack? If so, we are going to have problems and don't think he can step in as (chief executive)," Mr Aguirre quoted Mr Dinallo as saying.
"Over the next seven days, I saw this investigation come to a grinding halt," Mr Aguirre said.
Mr Dinallo, who was one of Eliot Spitzer's top lieutenants during the New York attorney general's investigation of Wall Street conflicts of interest, joined Morgan Stanley in 2003 but left to become general counsel at Willis Group in March.
According to Mr Aguirre's account, his SEC superiors changed their position on questioning Mr Mack at the very time that he was being considered as chief executive of Morgan Stanley.
Mr Aguirre said he had attempted to present documented evidence that he thought supported his request to subpoena Mr Mack, but it was rejected by his superior.
"He threw one of the spreadsheets at me physically," Mr Aguirre said.
The Wall Street bank was at the time reeling from the removal of Philip Purcell as chairman and chief executive and there was strong lobbying for his replacement by Mr Mack in the face of initial opposition from some board members.
In a letter to senators, first reported in The New York Times last week, Mr Aguirre said his branch chief, Robert Hanson, at first reacted positively to his suggestion that Mr Mack should be questioned.
But Mr Hanson later blocked the move, stating that it would be difficult to get authority because of the subject's "powerful political connections".
Mr Aguirre said that Mary Jo White, the former New York federal prosecutor who was advising the Morgan Stanley board, talked directly to Linda Thomsen, the SEC's director of enforcement, about the case.
Mr Aguirre wanted to question Mr Mack about whether he tipped off his friend Arthur Samberg, head of Pequot, about a takeover bid.
Pequot said it received no tip-offs from anybody and Morgan Stanley said there was no evidence that Mr Mack engaged in any wrongdoing.
www.theaustralian.news.com.au/story/0,20867,19629461-36375,00.html