Senate is Probing SEC

June 7th, 2011
in econ_news


Photo:  Sen. Charles Grassley

 Econintersect:  The SEC (Securities and Exchange Commission) has long been facing questions about its operations.  No more conspicuous case has surfaced than the Bernard Madoff case where the agency failed to follow up on very explicit and credible reports of fraud received over several years.  It now is reported by Thompson Reuters that the recent investigation of insider trading by SAC Capital Advisors, being conducted by Senator Charles Grassley (R-Iowa), is actually focused on the SEC.  Previous reports by Reuters had implied that Grassley was investigating the activities at SAC. 

Follow up:

From Thompson Reuters News & Insight yesterday:

Grassley and his investigators see it as a follow up to their 2006 probe of the SEC's handling of Pequot Capital Management, a now-defunct hedge fund that was eventually charged in May 2010 by the SEC with insider trading in Microsoft Corp securities.

Grassley has asked the SEC to respond by Tuesday with a written explanation for how the agency has responded to past referrals about SAC trading and whether any "Wells Notices" were ever drafted. A Wells Notice is a notification from a regulator that it plans to recommend enforcement action.

Earlier (May 24) Reuters reported Grassley's action as if the focus was the activity of SAC.  At that time Reuters wrote:

A top U.S. lawmaker is asking the Securities and Exchange Commission to explain how the country's top financial regulator handled its oversight of hedge fund industry heavyweight SAC Capital Advisors.

Senator Charles Grassley of Iowa, the top-ranking Republican member of the Senate Judiciary Committee, stepped up the pressure on the SEC on Tuesday in a letter sent to Mary Schapiro, the SEC's chair.

Grassley, who has long criticized the SEC for not adequately protecting average American savers, is reviewing 20 stock trades made by Steven Cohen's nearly $14 billion fund over the last decade. The senator regards the trades as potentially suspicious.

The latest report seems to indicate that SAC is an incidental factor to Grassley, who is continuing an ongoing campaign to investigate SEC operations. 

Sources:  Thompson Reuters News & Insight and Reuters 


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