Aguirre Victory

A report released last Friday by the Senate Finance and Judiciary committees represents a significant victory for Gary Aguirre, the S.E.C. staff attorney who was fired two years ago following his attempt to subpoena John Mack, now the CEO of Morgan Stanley, in an insider trading investigation of Pequot Capital Management, a leading hedge fund.

In 2005, Aguirre was investigating possible insider trading involving Pequot. In June of that year, he attempted to issue a subpoena to Mack, a prominent Wall Street executive who had briefly served as chairman of Pequot and who maintained a close friendship with Pequot founder Arthur Samberg.  His recommendation that Mack be required to testify was met with strong resistance from Aguirre's S.E.C. superiors, and after protesting that the investigation was being hindered, Aguirre was fired. Aguirre testified at a Senate Judiciary hearing which led to the promise of Senators Chuck Grassley and Arlen Specter to fully investigate the actions of S.E.C. officials in the case.

The result of that yearlong investigation is a 108-page report which details a virtual laundry list of wrongdoing on the part of S.E.C. officials. Not only was Aguirre wrongfully retaliated against, but the report charges that the S.E.C. botched a crucial investigation which would have made a powerful statement about its commitment to preventing insider trading. The report found that lawyers for Mack and Samberg received access to high-level S.E.C. officials, going over Aguirre's head as the chief investigator on the case. Soon afterward, Aguirre was ordered to investigate only a fraction of the suspicious transactions, severely limiting the scope of his case, and he was denied access to Mack.