JUNE 29, 2006
A U.S. government whistleblower fired for trying to subpoena a politically connected Wall Street executive during an insider trading investigation was muzzled by his former agency during Congressional testimony this week. The former Securities and Exchange Commission attorney was warned by agency officials to comply with his “ethical obligations,” which basically means to keep quiet.
Apparently, the SEC, the government’s top cop for Wall Street, wants to eliminate evidence of how it covered up for a powerful and politically connected CEO named John Mack,
who, among other things, is a major fundraiser for President George W. Bush. In fact, Mack was one of the nine Wall Street “Rangers” who raised at least $200,000 for Bush’s re-election campaign.
When the insider trading investigation of major hedge fund Pequot Capitol pointed to the president’s deep-pocketed pal, agency officials warned the lead investigator on the case, former SEC attorney Gary Aguirre, to back off. Pequot had made a profit of $18 million based on illegal insider trading and Aguirre had gathered lots of evidence – including millions of e-mails, telephone records and credit card receipts – pointing to Mack as the source of the tip.
Mack is currently the chief executive of Morgan Stanley, one of the nation’s largest securities firm, but at the time he held the same position at another company. Besides his powerful buddy in the White House, he is also good friends with the head of Pequot, a man named Arthur Samberg. The fired whistleblower said that high-ranking SEC officials quashed his probe into Pequot as soon as his leads got too close to the politically connected Mack.
Upon getting fired, Aguirre wrote a damaging 18-page letter to a pair of senators and the chairman of the Senate Banking and Finance Committee. It details how SEC officials halted his investigation and forbid him from talking to Mack. He also writes that “it is not surprising that the US Office of Management and Budget gave SEC enforcement its lowest performance assessment.”
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