Post by jannikki on Dec 7, 2006 6:01:38 GMT -4
Hedge Fund Hearing Gets Personal
Posted by Mike Gibb on Dec 06 2006 05:46:53 PST
A hearing intended to discuss insider trading at hedge funds quickly degenerated into finger-pointing between a former investigator at the Securities and Exchange Commission and executives at his former employer.
Gary Aguirre, a former staff attorney at the SEC, claims he was fired for trying to depose John Mack, the chairman and chief executive of Morgan Stanley & Co., during an investigation into alleged insider trading at hedge fund Pequot Capital Management. Mack is the former chairman of Pequot.
SEC staffers insisted that Aguirre was let go because his performance was substandard, even though he had recently received a raise prior to his departure.
Separately, Senate Judiciary Committee Chairman Arlen Specter (R-Pa.) conceded during the hearing that his bill, which would require hedge funds to register with the SEC, would have to wait until January when the next session of Congress convenes.
Click on "Read More" below for the full article by Washington Post.
www.banknet360.com/news/NewsAbstract.do?na_id=6495&service_id=1&bi_id=
Hedge Fund Forum Gets Fiery
Panel on Regulation Devolves Into Dispute Over Ex-Regulator
By Carrie Johnson
Washington Post Staff Writer
Wednesday, December 6, 2006; Page D02
A Senate hearing to examine whether hedge funds deserve increased scrutiny instead descended into recrimination yesterday as officials at the Securities and Exchange Commission and a former agency lawyer traded allegations about the handling of a sensitive investigation.
Senate Judiciary Committee Chairman Arlen Specter (R-Pa.) called the hearing to build support for draft legislation that would require hedge funds, loosely monitored pools of capital favored by wealthy investors, to register with regulators and to disclose information about their operations. The funds play an increasing role in the economy, and they attract intense interest from pension funds and average investors.
Former SEC lawyer Gary J. Aguirre told a Senate panel that he was fired because of a hedge fund investigation. (By Jay Mallin -- Bloomberg News)
But Specter's bill, which he acknowledged would be stalled at least until January when the Democrats assume control of both chambers of Congress, quickly fell by the wayside in the wake of a flurry of personal attacks among current and former SEC lawyers. At one point, the remarks grew so heated that Specter said, "This hearing is filled with accusations and counteraccusations and denials, so if you have any denials to make, don't wait for me to ask."
The dispute centered on allegations made by Gary J. Aguirre, a former SEC enforcement lawyer who says he was fired last year for seeking to depose Wall Street titan John Mack in a probe into whether Mack and executives at the hedge fund Pequot Capital Management engaged in insider trading. That investigation ended earlier this year without any charges of wrongdoing.
Aguirre has pointed to a 2005 e-mail from an SEC official warning him to move carefully because of Mack's connections. His accusations have prompted three congressional hearings, though agency leaders strongly deny their merit.
Yesterday, SEC officials, who had been circumspect about the reasons for Aguirre's termination, accused him of failing to take direction and feuding with colleagues. Linda Chatman Thomsen, the SEC's enforcement director, said that on one occasion, Aguirre had issued subpoenas that violated federal privacy laws without notice or approval from supervisors, who discovered the problem and yanked back the requests.
Mark Kreitman, an SEC enforcement lawyer who had served as Aguirre's teacher at Georgetown University and his supervisor at the agency, said his protege threw "what can only be described as tantrums" when he failed to get his way. Aguirre received a pay raise shortly before he was fired, but Kreitman said the increase covered a period when Aguirre's performance had been adequate, only to plummet rapidly.
Lawmakers pressed several current and former SEC enforcement officials about why Mack, now chief executive of Morgan Stanley, was interviewed after the statute of limitations had expired and a few days after Specter's panel held a hearing into the issues. Regulators said they could only question Mack after they had done enough research to establish a reason for an interview.
One agency official testified in support of Aguirre. Eric Ribelin, who analyzes trading patterns, said he wrote an e-mail seeking to be transferred off the investigation because of "serious misgivings." "Something smells rotten," he wrote in the September 2005 e-mail. Neither Aguirre nor Ribelin produced evidence at the hearing that Mack had engaged in wrongdoing.
Enforcement official Robert B. Hanson, who sent an e-mail to Aguirre warning him to proceed cautiously because of Mack's clout, said he had interviewed people who met with Mack around the time of the suspect Pequot trades and asserted they did not possess inside information they could have handed over. Hanson said he had no idea that Mack had powerful Republican connections until he read a news report indicating that Mack had been a contributor to President Bush's campaign.
The tit-for-tat overshadowed a call from Connecticut Attorney General Richard Blumenthal for greater disclosure of hedge fund risks and increasing the minimum level of investment for people to buy into hedge funds.
"There is a growing consensus within the hedge fund industry that measures to require greater transparency are inevitable," testified Blumenthal, whose state is home to thousands of hedge funds.
www.washingtonpost.com/wp-dyn/content/article/2006/12/05/AR2006120501406.html
Posted by Mike Gibb on Dec 06 2006 05:46:53 PST
A hearing intended to discuss insider trading at hedge funds quickly degenerated into finger-pointing between a former investigator at the Securities and Exchange Commission and executives at his former employer.
Gary Aguirre, a former staff attorney at the SEC, claims he was fired for trying to depose John Mack, the chairman and chief executive of Morgan Stanley & Co., during an investigation into alleged insider trading at hedge fund Pequot Capital Management. Mack is the former chairman of Pequot.
SEC staffers insisted that Aguirre was let go because his performance was substandard, even though he had recently received a raise prior to his departure.
Separately, Senate Judiciary Committee Chairman Arlen Specter (R-Pa.) conceded during the hearing that his bill, which would require hedge funds to register with the SEC, would have to wait until January when the next session of Congress convenes.
Click on "Read More" below for the full article by Washington Post.
www.banknet360.com/news/NewsAbstract.do?na_id=6495&service_id=1&bi_id=
Hedge Fund Forum Gets Fiery
Panel on Regulation Devolves Into Dispute Over Ex-Regulator
By Carrie Johnson
Washington Post Staff Writer
Wednesday, December 6, 2006; Page D02
A Senate hearing to examine whether hedge funds deserve increased scrutiny instead descended into recrimination yesterday as officials at the Securities and Exchange Commission and a former agency lawyer traded allegations about the handling of a sensitive investigation.
Senate Judiciary Committee Chairman Arlen Specter (R-Pa.) called the hearing to build support for draft legislation that would require hedge funds, loosely monitored pools of capital favored by wealthy investors, to register with regulators and to disclose information about their operations. The funds play an increasing role in the economy, and they attract intense interest from pension funds and average investors.
Former SEC lawyer Gary J. Aguirre told a Senate panel that he was fired because of a hedge fund investigation. (By Jay Mallin -- Bloomberg News)
But Specter's bill, which he acknowledged would be stalled at least until January when the Democrats assume control of both chambers of Congress, quickly fell by the wayside in the wake of a flurry of personal attacks among current and former SEC lawyers. At one point, the remarks grew so heated that Specter said, "This hearing is filled with accusations and counteraccusations and denials, so if you have any denials to make, don't wait for me to ask."
The dispute centered on allegations made by Gary J. Aguirre, a former SEC enforcement lawyer who says he was fired last year for seeking to depose Wall Street titan John Mack in a probe into whether Mack and executives at the hedge fund Pequot Capital Management engaged in insider trading. That investigation ended earlier this year without any charges of wrongdoing.
Aguirre has pointed to a 2005 e-mail from an SEC official warning him to move carefully because of Mack's connections. His accusations have prompted three congressional hearings, though agency leaders strongly deny their merit.
Yesterday, SEC officials, who had been circumspect about the reasons for Aguirre's termination, accused him of failing to take direction and feuding with colleagues. Linda Chatman Thomsen, the SEC's enforcement director, said that on one occasion, Aguirre had issued subpoenas that violated federal privacy laws without notice or approval from supervisors, who discovered the problem and yanked back the requests.
Mark Kreitman, an SEC enforcement lawyer who had served as Aguirre's teacher at Georgetown University and his supervisor at the agency, said his protege threw "what can only be described as tantrums" when he failed to get his way. Aguirre received a pay raise shortly before he was fired, but Kreitman said the increase covered a period when Aguirre's performance had been adequate, only to plummet rapidly.
Lawmakers pressed several current and former SEC enforcement officials about why Mack, now chief executive of Morgan Stanley, was interviewed after the statute of limitations had expired and a few days after Specter's panel held a hearing into the issues. Regulators said they could only question Mack after they had done enough research to establish a reason for an interview.
One agency official testified in support of Aguirre. Eric Ribelin, who analyzes trading patterns, said he wrote an e-mail seeking to be transferred off the investigation because of "serious misgivings." "Something smells rotten," he wrote in the September 2005 e-mail. Neither Aguirre nor Ribelin produced evidence at the hearing that Mack had engaged in wrongdoing.
Enforcement official Robert B. Hanson, who sent an e-mail to Aguirre warning him to proceed cautiously because of Mack's clout, said he had interviewed people who met with Mack around the time of the suspect Pequot trades and asserted they did not possess inside information they could have handed over. Hanson said he had no idea that Mack had powerful Republican connections until he read a news report indicating that Mack had been a contributor to President Bush's campaign.
The tit-for-tat overshadowed a call from Connecticut Attorney General Richard Blumenthal for greater disclosure of hedge fund risks and increasing the minimum level of investment for people to buy into hedge funds.
"There is a growing consensus within the hedge fund industry that measures to require greater transparency are inevitable," testified Blumenthal, whose state is home to thousands of hedge funds.
www.washingtonpost.com/wp-dyn/content/article/2006/12/05/AR2006120501406.html