SEC urged to define process for inquiries

Two U.S. senators, closing a yearlong probe into whether the Securities and Exchange Commission mishandled insider-trading allegations involving Morgan Stanley Chief Executive John Mack, called on the agency Friday to change its methods to restore public confidence.

Sen. Charles E. Grassley (R-Iowa) and Sen. Arlen Specter (R-Pa.) began their review after a fired SEC attorney said supervisors blocked him from pursuing an investigation into whether a hedge fund had executed trades based on information provided by Mack. The hedge fund and Mack denied any misconduct.

A report released Friday by the senators said the SEC should establish uniform procedures for how it handled investigations. The agency also should set standards for making sure significant matters received more resources, the report said.

SEC Chairman Christopher Cox said the agency would follow up on the report’s recommendations with “energy and urgency.” “The agency’s commitment to prosecuting insider trading has never been stronger,” he said in an e-mailed statement.