Morgan Stanley CEO to Testify
The Securities and Exchange Commission has asked Morgan Stanley Chief Executive John Mack to testify regarding what role he may have played in an insider trading case involving hedge fund Pequot Capital, Morgan Stanley said Friday.
A former SEC investigator has said he was fired after pursuing evidence that Mack allegedly had tipped off Pequot, where Mack briefly served as chairman, about a pending merger. Mack has denied any wrongdoing, as has Pequot.
Morgan Stanley said it was notified of the SEC request Thursday and the deposition could take place in coming weeks.
“Yesterday, the SEC contacted John Mack and asked that he be interviewed regarding the hedge fund matter that has been widely covered by the media recently,” Jeanmarie McFadden, a spokeswoman for the brokerage, said in a statement. “John immediately responded that he is happy to meet with the commission staff, and he welcomes the opportunity to put to rest any issues surrounding this matter.”
The request comes days before SEC Chairman Christopher Cox is scheduled to testify before the Senate Banking Committee regarding hedge funds, which are private partnerships that invest for wealthy individuals and institutions.
The SEC’s investigation of Pequot drew fire several weeks ago when former SEC investigator Gary Aguirre went public with claims that top SEC officials put a stop to the probe after he requested Mack’s testimony.
Reached by phone Friday, Aguirre declined to comment but said a statement was being prepared.
Mack briefly was chairman of Pequot before being named Morgan Stanley’s CEO in June 2005. He rejoined the brokerage after the ouster of CEO Philip Purcell, who had earlier pushed out Mack as the firm’s president.
The SEC, which in the past has denied giving any preferential treatment to Mack or anyone else in the matter, declined to comment.
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Hedge Funds Pull In
$42.1 Billion in Quarter
Hedge funds attracted a net $42.1 billion from April through June, the most in one quarter since at least 2003, according to a new report.
The funds’ net inflow for the first half was $66 billion, bringing total assets to $1.23 trillion, Chicago-based Hedge Fund Research Inc. said.
For all of 2005 the funds took in a net $47 billion.
Hedge funds that invest in stocks were the most popular category in the quarter, collecting a net $13 billion.
So-called macro funds, which try to cash in on macroeconomic trends by investing in stocks, bonds, currencies and commodities, pulled in $8.4 billion.
“Event-driven” funds, which bet on companies going through mergers and other corporate actions, added $6.4 billion.
From Bloomberg News
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Judge Allows Talks in
Quattrone Case to Go On
The federal judge presiding over the obstruction-of-justice prosecution of former Silicon Valley investment banker Frank Quattrone on Friday gave both sides another month to work out an agreement to avoid a third trial.
A U.S. appeals court in March threw out Quattrone’s conviction and ordered a new trial, citing faulty jury instructions. Quattrone’s first trial ended in a hung jury in October 2003. He was convicted after a second trial in May 2004.
Quattrone, 50, was charged with urging fellow Credit Suisse bankers to destroy records after learning of a U.S. investigation into how the bank distributed shares of initial public stock offerings.
“We hope to advise the court very shortly regarding the conclusion of the parties’ discussions,” defense attorney Mark Pomerantz wrote in a two-page letter to U.S. District Judge George Daniels in New York.
Daniels has granted several postponements related to a trial date to allow for a possible resolution of the case.
In requesting the latest adjournment, Pomerantz told Daniels that the two sides didn’t “presently anticipate” more postponements.
The judge approved the request in the letter, which gave no details about the nature of the negotiations. The parties have until Aug. 21 to work out a solution.
From Bloomberg News
