Legal News

SEC paying $755K to settle with fired lawyer

By (Breaking Legal News)

The Securities and Exchange Commission is paying $755,000 to settle a lawsuit with a former staff lawyer who accused the agency of blocking his investigation of a prominent hedge fund.

The SEC settlement of Gary Aguirre's wrongful termination claim resolved a long-running controversy that prompted scrutiny in Congress and by the SEC inspector general. The settlement was announced Tuesday by the Government Accountability Project.

Aguirre was fired by the SEC in September 2005. He went public in 2006 with allegations of interference by SEC officials in the probe of Pequot Capital Management and improper deference to a Wall Street executive whom Aguirre wanted to interview. That prompted an investigation by Republican staff of the Senate Judiciary and Finance Committees.

The SEC initially took no enforcement action in the case, which was started in 2004 and closed in 2006. The agency reopened it in January 2009 after documents emerged in a divorce proceeding showing that Pequot began paying $2.1 million to a key witness in the case in mid-2007.

Last month, Pequot and its founder and chairman, Arthur Samberg, agreed to pay a total of $28 million to settle the SEC's charges of insider trading of Microsoft Corp. shares. The SEC alleged that the hedge fund traded Microsoft shares on confidential information provided by a former employee of the technology giant whom it later hired.

Pequot, whose core hedge fund was liquidated last year, and Samberg, a well-known money manager and philanthropist, neither admitted nor denied wrongdoing.

The $755,000 being paid to Aguirre represents his salary for four years and 10 months plus his attorneys' fees, according to the Government Accountability Project, a group that works with whistleblowers. The group said it may be the largest settlement of its kind.

Under terms of the settlement, which was approved by a judge at the federal Merit Systems Protection Board, Aguirre agreed to drop two related cases against the SEC.

Full post as published by Breaking Legal News on June 30, 2010 (boomark / email).