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Replies to post #160104 on Anavex Life Sciences Corp (AVXL)
sentiment_stocks Member Level Thursday, 07/26/18 05:44:47 PM
Re: learningcurve2020 post# 184142 0
Post #
184157
of 184224
Speaking of the SEC… has anyone ever heard of the American lawyer, SEC employee, and whistleblower Gary J. Aguirre? It’s actually a fascinating story about the type of double dealings going on at the SEC. I read about him and I thought about how the SEC has had NWBO now under some sort of investigation since around Fall 2006. None of us are sure exactly what that investigation entails, we just know it’s ongoing.
So since learning curve was so thoughtful as to bring it up again, I thought some readers might find what happened to Gary Aguirre while he worked there of interest.
Rather than go into all the details of his time before Aguirre worked for the SEC, I’ll just jump into the story of his time with the SEC. You can read through the additional details at his wikipedia page, if you’d like.
https://en.wikipedia.org/wiki/Gary_J._Aguirre
Anyhow, Gary went to work as a senior counsel at the SEC Division of Enforcement in Washington, D.C. in 2004.
He came across a trade that showed unusual purchases by Pequot Capital Management (a hedge fund) in Heller Financial during the month of July 2001. Pequot was run by its CEO, Arthur Samberg.
As the details later emerged (see the Gary J. Aguirre Investigation Timeline in the link above), John Mack, of Morgan Stanley, talked to one of Heller Financial’s advisors, Credit Suisse, where he himself had previously worked, on June 26, 2001.
On June 29, 2001, John Mack makes a call to Arthur Samberg after market closes.
Between July 2 and 27th, 2001, Pequot makes heavy stock purchases in Heller Financial. On July 30, 2001, Heller Financial is sold to GE Capital. And Pequot pockets $18 million.
In his position with the SEC, Aquirre is made lead investigator on this case. He pushes to subpoena John Mack, who is a top Wall Street executive and under consideration to become Morgan Stanley’s CEO (which he later becomes). He is also a major contributor to the 2004 presidential campaign of George Bush.
On June 23, 2005, while the investigation has been ongoing, Aguirre receives a phone call from the head of regulatory compliance at Morgan Stanley - Eric Dinallo - who wants to know if the SEC is going to proceed against Mack. Remember, Mack is being considered to become CEO of Morgan Stanley.
That same day, Aguirre’s immediate supervisor, Robert Hanson, tells Aguirre that it will be an uphill battle to pursue Mack due to his “powerful political connections.”
Three days later (June 26th, 2005), a partner at the law firm hired to vet John Mack, Mary Jo White, calls Aguirre’s supervisor four levels above at the SEC, Linda Chatman Thomsen. What they spoke about was unknown, and Thomsen later told the Senate in a still-to-come Senate investigation, that she told White she could not speak about the Mack investigation. But White’s talking points shown in that same investigation indicated that in that conversation, Thomsen had said to White that there was “smoke” but “surely not fire.”
Five days later, on June 28, 2005, Aguirre sent his supervisors his analysis of the evidence against Pequot and his proposal to interview Mack. That same day, he had a heated discussion about the SEC’s refusal to interview Mack with Mark Kreitman, one of Aguirre’s supervisors, and his former professor at Georgetown. During this same time, he was given his year-end performance, which noted his dedication, and how he, Aguirre, consistently went the extra mile, and then some. He was also given a two-step salary increase.
A month later, on July 27, 2005, Aguirre sends an email to another supervisor, Paul R. Berger, explaining the importance of the Mack subpoena, and expresses concern that treating Mack differently is not consistent with the Commission’s mission, which is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”
Then on August 4, 2005, Mack is told to take his vacation, and that whether or not to subpoena Mack will be decided in September. During this time, Berger tells Mack’s immediate supervisor, Robert Hansen, to do a “supplemental evaluation” of Aguirre and one other staff attorney “looking to raise trouble.” Later, when this comes up before the Senate, the report notes show that such “re-evaluations” were not an authorized part of the SEC evaluation process, nor were SEC officials able to recall other instances where “supplemental evaluations” were drafted for any other employees.
But at the time, when the SEC did the re-evaluation of Aguirre’s job performance, they decided to reverse the positive appraisal given just the month prior. And while Aguirre was on vacation, he was abruptly fired without warning on September 1, 2005.
On September 8, 2005, Paul Berger, who had asked for the supplemental evaluation of Aguirre, received an email titled “Debevoise” (the law firm hired to vet Mack) from another SEC official at the same level as Berger. In it, the other SEC official stated that he had mentioned to Mary Jo White (a partner there, and the one who spoke to the SEC’s Linda Chatman Thomsen) that Berger was interested in working at Debevoise. This interest had been expressed by Berger earlier in the year 2005. Within weeks, it was rumored at the SEC that Berger would be leaving the SEC to join Debevoise & Plimpton as a partner.
And guess what? He resigned on May 15, 2006, and on June 1, 2006, he went to work for Debevoise & Plimpton, from which he later retired from.
https://www.bondbuyer.com/news/sec-enforcement-official-paul-berger-leaving-to-join-debevoise-plimpton
Now.. while that story probably does get your blood to boiling, Aguirre was vindicated by the Senate, who found he was illegally fired in retaliation. The notes of that, including Aguirre’s testimony, were released on August 3, 2007.
By 2006, both the Senate Finance Committee and the Senate Judiciary Committee were investigating the matter, culminating in what Forbes magazine called a "scathing" report.[42] In testimony, Aguirre told the committee there needed to be better regulation of hedge funds to protect the public.[41] He said, "There is growing evidence that today's unregulated hedge funds have advanced and refined the practice of manipulating and cheating other market participants. The potential harm hedge funds can inflict on other market participants has no real limits."[43][44] He warned that fixing the SEC so it would protect investors and capital markets would not be easy because powerful Wall Street investment banks liked things as they are[41][44] He said the SEC and the Justice Department had failed to adequately prosecute abuses by hedge funds,[41][44] and he compared the situation to that which preceded the stock market crash of 1929.[44]
https://en.wikipedia.org/wiki/Gary_J._Aguirre
On April 1, 2009, Aguirre filed a second lawsuit against the SEC for unlawful disclosure of his records, for violating the due process clause of the Fifth Amendment, and for inductive relief under the Privacy Act and FOIA. On December 2, 2009, in an interim decision on the FOIA case, the Court ruled in his favor. On May 26, 2010, Aguirre filed papers in this case, seeking an order directing the SEC to release additional Pequot records (involving a leak of Microsoft non-public earnings information - see link below) to him on the grounds that under the FOIA, the SEC had to turn the records over to him because it had filed no case against Pequot or anyone else.
The next morning, on May 27, 2010, the SEC filed charges against Pequot, Arthur Sandberg, and David Zilkha (an employee of Sandberg’s). Pequot and Sandberg agreed to pay nearly $28 million to settle those charges.
https://www.sec.gov/news/press/2010/2010-88.htm.
Aguirre had also sued the SEC over this wrongful termination, and eventually was awarded $755,000 on June 29, 2010 - which was an amount equal to four years and ten months of lost salary and attorney’s fees.
As for John Mack, who became the CEO of Morgan Stanley on June 30, 2005, the SEC closed the investigation in late November 2006, recommending that no action be taken against him. You’ll notice that the day he became CEO, was four days after Mary Jo White, the lawyer at Debevoise & Plimpton vetting Mack for the position, spoke to SEC Enforcement Director Linda Thomsen, and who’s notes later reflected there was “smoke” but “surely not fire.”
https://en.wikipedia.org/wiki/John_J._Mack
On February 9, 2009, the SEC announced that Linda Thomsen would resign from her position. This was five days after her appearance before the House subcommittee, and after having been blasted by critics for turning a blind ey to tips that could have caught Bernie Madoff earlier. She then returned to work for Davis Polk & Wardwell on April 12, 2009, where she advises clients on internal investigations and defend them against SEC probes where she still works. She is married to Steuart Hill Thomsen, a partner in the law firm Sutherland Asbill & Brennan LLP, whose clients include hedge funds, broker dealers, and investment advisors for securities enforcement matters.
https://en.wikipedia.org/wiki/Linda_Chatman_Thomsen
AI
