Senate Investigators Target SEC Officials Inside Knowledge on Bear Stearns Cited By Amit R. Paley Washington Post Foreign Service Wednesday, October 22, 2008; Page D03 Senate investigators are looking into whether senior officials at the Securities and Exchange Commission provided confidential information to former colleagues working on Wall Street. The inquiry began after the SEC's Inspector General received an anonymous tip earlier this month. It alleged that Linda Chatman Thomsen, the agency's director of enforcement, gave information about investigations into Bear Stearns around March to the general counsel of J.P. Morgan Chase, which at the time was considering whether to buy the troubled investment bank. The Oct. 7 complaint claimed that the inside knowledge obtained by the attorney, Stephen M. Cutler, a former head of enforcement at the SEC, allowed J.P. Morgan to low-ball its bid to purchase Bear Stearns. A copy of the complaint was also provided to Sen. Charles E. Grassley (R-Iowa), the ranking member on the Senate Finance Committee. In a letter sent last night to the SEC, Grassley asked for information about all SEC investigations into Bear Stearns, as well as communications between SEC officials and J.P. Morgan Chase about those cases. "Such conduct would reinforce the appearance that Enforcement decisions, and disclosures of information about them, are sometimes based not on the merits," he wrote in his letter yesterday, "but rather on access to senior officials by influential representatives of power brokers on Wall Street." An SEC spokesman declined to comment last night. J.P. Morgan Chase did not respond to a request for comment last night. The inspector general, H. David Kotz, issued a report last month that criticized what some agency employees called the "common practice" of outside lawyers gaining access to senior SEC officials. He also said the agency should consider disciplining Thomsen for such behavior while she was in charge of an insider-trading case. Grassley raised concerns last year about improper communications between high-level SEC officials and attorneys at firms under investigation.
Amit R. Paley Washington Post Foreign Service ============= Two thoughts. Foreign Service is an oxymoron or she picked this tid bit up on a slow newsday in Bagdad.
And often times, as I think many defense counsel would be happy to tell you, when we dig in, what we find is that some of the information that has caused people to be shorting is actually true as to the company, ------------------ LINDA THOMSEN: âAs to naked short selling, and more generally market manipulation generally (sic), it is an area we are focused on. We have seen fewer cases in that arena because, often times, this is not necessarily with respect to naked shorts, but shorting or market manipulation more generally, because often the components of something that might look to be manipulative are all legal trades as you point out. So itâs a hard case to bring, which is not to say that it isnât something that we donât investigate, because we do. So I .. hear and understand the frustration of many on the subject of short selling generally. When we hear complaints about short sellingâand, frankly, it is both short and naked short, it is a combination of bothâwe routinely hear from companies whoâve come in, who worry that theyâre being shorted in an illegal way. We routinely take all that information in and look into it. And often times, as I think many defense counsel would be happy to tell you, when we dig in, what we find is that some of the information that has caused people to be shorting is actually true as to the company, and we may very well be confronted with two issues, one on the company and its disclosure side as well as on the trading side. But theyâre very difficult cases, which is not to say that we arenât focused on them and interested in them and indeed this new focus that we have on some smaller companies and smaller issuers will wrap some of those concerns into their focus as well.
sure. Just a coincidence she 's been recommended for disciplinary action on another case, and she tipped somebody on Bear. So you know, i't s not just Grassley. But you all believe what you will.
Damn, what is it about you guys. This was a report published in the Washington Post. Does it merit consideration - clearly based on what we have come to understand these past months. The SEC has a policy where they do not confirm or deny investigations taking place and do not discuss publicly or privately the components of an on-going investigation. That is policy. The fact that a Director of Enforcement (the one whose job it is to direct the enforcement the rules) is AGAIN being accused of illegally providing information to 'connected' third parties should disturb each of you regardless of your views on short selling. If the communication between Thomsen and Cutler led to any deal making strategies or trading strategies then such communication was criminal fraud involving aiding and abetting. If the OIG finds these claims to be accurate she should have a criminal investigation against her and Cutler initiated.
Welcome to my world. I will tell you, intelligent people do read the boards, and I get some good Pm's. The rank and file are pretenders. To not think a Senate investigation on the dir of enf, and prev dir of enf is not significant is just plain ignorant.
Damn, what is it about you guys. This was a report published in the Washington Post. Does it merit consideration - clearly based on what we have come to understand these past months. ------------------- Yes it does merit consideration. But, I've seen worse. It doesn't have a convienent name though or fit into a nice compartment.