Washington – Two senior senators said Wednesday that an official review raises serious questions about the Securities and Exchange Commission’s handling of an insider-trading investigation and the possibility of a coverup amid allegations of interference by SEC officials.
Sen. Arlen Specter, R-Pa., the Judiciary Committee chairman in the last Congress, and Sen. Charles Grassley, R-Iowa, a member of the panel, raised the questions after hearing last spring from former SEC attorney Gary Aguirre. He told Congress he was blocked by superiors at the SEC when he tried to question John Mack, now chairman of investment house Morgan Stanley, in the insider-trading investigation of hedge fund Pequot Capital Management Inc.
The investigation was begun in 2005 to determine whether Pequot had received a tip in 2001 about an upcoming $5.3 billion merger between General Electric Capital Corp. and Heller Financial Inc. Aguirre has pointed to Mack as the likely person who tipped Pequot to the merger.
