Post by jcline on Dec 6, 2006 12:32:56 GMT -4
STOCKGATE TODAY-SEC Airing of Dirty Laundry Failed
An online newspaper reporting the issues of Securities Fraud
SEC Airing of Dirty Laundry Failed - December 6, 2006
David Patch
On Tuesday the Senate Judiciary Committee held a public hearing on the botched SEC investigation into the insider trading allegations against prominent Wall Street icon John Mack and the equally prominent Hedge Fund Pequot Capital. The hearing provided the SEC opportunity to testify openly and without restriction their side of this growing scandalous event.
Unfortunately for the SEC staff members that attended, which included SEC Director of Enforcement Linda Thomsen, Branch Supervisor Robert Hanson, Asst. Director Mark Kreitman, and former Associate Director Paul Berger, the open airing was more the bust. Instead of diffusing allegations of impropriety, the SEC staff simply raised more doubts about the integrity of the process and the qualifications of the staff members involved.
While the hearing was supported by only two of the Committees' team of Senators, Judiciary Chair Arlen Specter and Finance Committee Chair Charles Grassley used the time efficiently to systematically break down the SEC's excuses and activities as presented. Only once was the term "cover-up" used but there were opportunities where the attending audience felt the cold chill of exactly that.
SEC Branch Supervisor Robert Hanson was the recipient of the greatest degree of wrath as the supervisor's responses to questions bordered incompetence. Hanson was accused of issuing a drafting an unprecedented supplemental review of an employee, former SEC Attorney Gary Aguirre, without seeking out the necessary inputs to warrant such a draft. Hanson at one point using the single opinion of a "well respected attorney in the office", who accused Aguirre of unprofessional behavior in the Pequot interrogation, despite not being in attendance himself and despite the contrary opinions of two other attorneys present during the interrogation.
The first step for the SEC in this matter would be to seek out and understand what motivated such a "respected attorney" to make potentially false allegations against Aguirre. Those that contradict this individual comment included the SEC's expert in insider trading cases and the trainer for new hires in investigating insider-trading cases who also attended the interview.
Hanson was also challenged by the Senators on several damaging e-mail communications he had with SEC attorney's including Eric Ribelin who came and testified that he approached Hanson with concerns over the manner in which the investigation was being handled and at the lack of support being afforded Aguirre to seek out and receive answers to troubling questions. Ribelin eventually asked to be removed from the investigation shortly after Aguirre was terminated due to "something smelling rotten" in the investigation.
In one such e-mail communication Hanson referred to John Mack as a "bad guy" but merely 18 months later cannot recall why he would make such claims. Hanson later identifying that now that he had spoken to Mack such an opinion no longer existed.
Forgive me here but if I am not mistaken, there are several white collar criminals sitting in prison today that come across quite nicely as individuals yet still did the crime.
Hanson was caught red handed (e-mails) addressing the "juice" of Mack's attorney's and specifically identified "political clout" in identifying why Mack would be treated differently relative to seeking testimony. Hanson later denied politics played a role in the investigation despite such "red flags" and despite the fact that all others around the investigation were being questioned except John Mack.
Hanson was eventually reduced to rubble as he was only left with "the dog ate my homework excuses" as to why he said and acted in the manner he did.
And while Hanson was the recipient of the largest volley of distrust and concern, Assistant Director Mark Kreitman was also questioned on his participation in the about face activities involving Aguirre.
Senator Specter repeatedly asking the senior attorney why he signed off on Aguirre's performance review as meeting all expectations in June of 2005 to only turn around and participate in a supplemental review barely weeks later in which Aguirre was rated as an under achiever. The difference between the two reviews aligning with Aguirre's continued frustration at what he considered stall tactics by the staff in authorizing the interviewing of John Mack.
Aguirre's frustration could easily be supported by Ribelin's testimony in which he too believed that an uncharacteristic non-aggressive approach was being taken in this case and documented such.
Each of the SEC staff in attendance ultimately used the excuse that the subpoena being served on John Mack for testimony was not about politics but about timing. Each sounded the alarm that it is always about timing and having all your ducks in a row before executing a subpoena for information. Ironically these same attorney's admitted that as many as 100 subpoena's were in fact issued with the prominent executive John Mack's being the last and...conveniently 5 days after the statue of limitations had expired. This delay in the process made it impossible to seek punitive penalties if Mr. Mack was in fact found guilty of the crimes accused.
They were right, it was all about timing.
The display at the Senate hearing did little to instill investor confidence and trust in the SEC and the enforcement process. As these attorneys representing SEC management came in to air the dirty laundry regarding Mr. Aguirre's performance, what instead came out was that it was these individuals did not have their facts in order.
Aguirre was very articulate in his testimony and presented evidence obtained in his investigation that included dates, stock purchases, and communications rolling off his tongue as if he lived them. None of the SEC staff even came prepared with notes to speak of that supported the allegations that Aguirre was a rogue performer. Many times simply responding with an "I cannot recall" or "I do not know" response to questions.
The SEC team that came in was ill prepared to discuss this matter effectively, which was precisely what they had accused Aguirre of and which was reportedly what led to his termination. From the outside looking in, the wrong individual was terminated.
This testimony was a closer look inside the reason the SEC remains silent in the investigation process. The staff appears unqualified to lead a team down a methodical path to a quick resolution without sidestepping in far too many land mines along the way. Informing the public of such catastrophes would only expose their flaws and jeopardize an already fragile investor confidence level. The simple fact that the SEC finally did interview John Mack but only after it was too late stands as the foundation to their incompetence.
Demotions and/or terminations would only be too good for the crew testifying before the committee.
According to Senator Spector, "There are people under oath with directly contradictory testimony. It's very, very troubling" leading Specter to conclude, ""We're not finished with this, ladies and gentlemen." The question remains, is perjury one of the cards that could be dealt here in the future?
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006
An online newspaper reporting the issues of Securities Fraud
SEC Airing of Dirty Laundry Failed - December 6, 2006
David Patch
On Tuesday the Senate Judiciary Committee held a public hearing on the botched SEC investigation into the insider trading allegations against prominent Wall Street icon John Mack and the equally prominent Hedge Fund Pequot Capital. The hearing provided the SEC opportunity to testify openly and without restriction their side of this growing scandalous event.
Unfortunately for the SEC staff members that attended, which included SEC Director of Enforcement Linda Thomsen, Branch Supervisor Robert Hanson, Asst. Director Mark Kreitman, and former Associate Director Paul Berger, the open airing was more the bust. Instead of diffusing allegations of impropriety, the SEC staff simply raised more doubts about the integrity of the process and the qualifications of the staff members involved.
While the hearing was supported by only two of the Committees' team of Senators, Judiciary Chair Arlen Specter and Finance Committee Chair Charles Grassley used the time efficiently to systematically break down the SEC's excuses and activities as presented. Only once was the term "cover-up" used but there were opportunities where the attending audience felt the cold chill of exactly that.
SEC Branch Supervisor Robert Hanson was the recipient of the greatest degree of wrath as the supervisor's responses to questions bordered incompetence. Hanson was accused of issuing a drafting an unprecedented supplemental review of an employee, former SEC Attorney Gary Aguirre, without seeking out the necessary inputs to warrant such a draft. Hanson at one point using the single opinion of a "well respected attorney in the office", who accused Aguirre of unprofessional behavior in the Pequot interrogation, despite not being in attendance himself and despite the contrary opinions of two other attorneys present during the interrogation.
The first step for the SEC in this matter would be to seek out and understand what motivated such a "respected attorney" to make potentially false allegations against Aguirre. Those that contradict this individual comment included the SEC's expert in insider trading cases and the trainer for new hires in investigating insider-trading cases who also attended the interview.
Hanson was also challenged by the Senators on several damaging e-mail communications he had with SEC attorney's including Eric Ribelin who came and testified that he approached Hanson with concerns over the manner in which the investigation was being handled and at the lack of support being afforded Aguirre to seek out and receive answers to troubling questions. Ribelin eventually asked to be removed from the investigation shortly after Aguirre was terminated due to "something smelling rotten" in the investigation.
In one such e-mail communication Hanson referred to John Mack as a "bad guy" but merely 18 months later cannot recall why he would make such claims. Hanson later identifying that now that he had spoken to Mack such an opinion no longer existed.
Forgive me here but if I am not mistaken, there are several white collar criminals sitting in prison today that come across quite nicely as individuals yet still did the crime.
Hanson was caught red handed (e-mails) addressing the "juice" of Mack's attorney's and specifically identified "political clout" in identifying why Mack would be treated differently relative to seeking testimony. Hanson later denied politics played a role in the investigation despite such "red flags" and despite the fact that all others around the investigation were being questioned except John Mack.
Hanson was eventually reduced to rubble as he was only left with "the dog ate my homework excuses" as to why he said and acted in the manner he did.
And while Hanson was the recipient of the largest volley of distrust and concern, Assistant Director Mark Kreitman was also questioned on his participation in the about face activities involving Aguirre.
Senator Specter repeatedly asking the senior attorney why he signed off on Aguirre's performance review as meeting all expectations in June of 2005 to only turn around and participate in a supplemental review barely weeks later in which Aguirre was rated as an under achiever. The difference between the two reviews aligning with Aguirre's continued frustration at what he considered stall tactics by the staff in authorizing the interviewing of John Mack.
Aguirre's frustration could easily be supported by Ribelin's testimony in which he too believed that an uncharacteristic non-aggressive approach was being taken in this case and documented such.
Each of the SEC staff in attendance ultimately used the excuse that the subpoena being served on John Mack for testimony was not about politics but about timing. Each sounded the alarm that it is always about timing and having all your ducks in a row before executing a subpoena for information. Ironically these same attorney's admitted that as many as 100 subpoena's were in fact issued with the prominent executive John Mack's being the last and...conveniently 5 days after the statue of limitations had expired. This delay in the process made it impossible to seek punitive penalties if Mr. Mack was in fact found guilty of the crimes accused.
They were right, it was all about timing.
The display at the Senate hearing did little to instill investor confidence and trust in the SEC and the enforcement process. As these attorneys representing SEC management came in to air the dirty laundry regarding Mr. Aguirre's performance, what instead came out was that it was these individuals did not have their facts in order.
Aguirre was very articulate in his testimony and presented evidence obtained in his investigation that included dates, stock purchases, and communications rolling off his tongue as if he lived them. None of the SEC staff even came prepared with notes to speak of that supported the allegations that Aguirre was a rogue performer. Many times simply responding with an "I cannot recall" or "I do not know" response to questions.
The SEC team that came in was ill prepared to discuss this matter effectively, which was precisely what they had accused Aguirre of and which was reportedly what led to his termination. From the outside looking in, the wrong individual was terminated.
This testimony was a closer look inside the reason the SEC remains silent in the investigation process. The staff appears unqualified to lead a team down a methodical path to a quick resolution without sidestepping in far too many land mines along the way. Informing the public of such catastrophes would only expose their flaws and jeopardize an already fragile investor confidence level. The simple fact that the SEC finally did interview John Mack but only after it was too late stands as the foundation to their incompetence.
Demotions and/or terminations would only be too good for the crew testifying before the committee.
According to Senator Spector, "There are people under oath with directly contradictory testimony. It's very, very troubling" leading Specter to conclude, ""We're not finished with this, ladies and gentlemen." The question remains, is perjury one of the cards that could be dealt here in the future?
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006