Former “Basket Case” SEC Lawyer Gary Aguirre Receives $755,000 from Agency

Gary Aguirre, a former SEC lawyer, was right, the agency was wrong, and he has had the last word.  In 2005, Mr. Aguirre tried to get the agency to move on Pequot Capital Management for insider trading in Microsoft stock.  The agency refused to “go after the big fish,” and Mr. Aguirre was suddenly a non-performer.  He was  portrayed as a gadfly, a “basket case,” and then fired for insubordination. In May 2010, Arthur Samberg of Pequot, agreed to pay the SEC $28 million as a fine for the Microsoft  insider trading Mr. Aguirre had uncovered.  That settlement came after new evidence emerged in Mr. Samberg’s divorce case.  A case against a Microsoft employee for allegedly passing along the inside information to Mr. Samberg is pending. Mr. Samberg is alleged to have hired Microsoft employee David Zilkha who told Mr. Samberg before leaving Microsoft that the company would beat earnings expectations for the first quarter of 2001.  The Samberg divorce case revealed an e-mail from Samberg to Zilkha that read, “I shouldn’t say this, but you have probably paid for yourself already.”[1] Mr. Samberg made $18 million by buying Microsoft in advance of the earnings announcement.

How following Mr. Aguirre’s advice might have changed the financial markets.  Mr. Aguirre was going after the big fish.  John Mack of Morgan Stanley would have been interviewed.  Just a little cage rattling might have humbled the markets a bit at that time.  The failure to pursue the case also had a chilling effect on the agency.  After Mr. Aguirre was fired, what SEC attorney or accountant was willing to go out on a limb on any of the cases that proved to be so harmful for so many, including Madoff and Stanford?  Fear and silence, one of those 7 signs, was present in the SEC.  Its presence means the same thing in a government agency that it means in a business:  you won’t know what is really happening until it is too late.

Mr. Aguirre’s settlement of $755,000 consists of his salary since 2005 plus attorneys’ fees.

 


[1] Kara Scannell, “Samberg’s Insider Pact, 7 Years After,” Wall Street Journal, May 28, 2010, p. C1.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
This entry was posted in Seven Signs in Action. Bookmark the permalink.

2 Responses to Former “Basket Case” SEC Lawyer Gary Aguirre Receives $755,000 from Agency

  1. Sparky says:

    Congratulations to Gary Aguirre; not only for a job well done, but also for the tenacity to stay the course.

    But it is truly a sad state of affairs how biggest fish of all, the infamous John J Mack, escaped unscathed!

    Mack got away with thievery and remains free as a bird; free to continue operating in the same slippery way he always has, and oddly and repulsively, he seems to continues to garner the highest respect Wall St can muster!

    And what about the obviously-corrupted SEC management team – a phrase I use very loosely – that deliberately blocked Gary Aguirre’s investigative efforts at every pass? Why haven’t these thugs been dealt with? This reeks of corruption and is clearly unacceptable!

    With this sort of cover-up crap happening high up within the primary regulatory agency formed to supposedly prevent just such garbage; is it any wonder why the public now correctly perceives Wall Street as the sewerage system it is, and why investor confidence is at levels last seen in the 1930s?

    Also, we should all be asking these important and relevant questions: Why is Gary Aguirre receiving only a paltry $ 755,000 when the SEC walked away with a cool $ 28 million that it never would have seen a dime of had it not been for his efforts? And, what about the $ 18 million plus that Pequot Capital Management made trading on insider knowledge of the GE Capital-Heller Financial merger; knowledge illegally provided by the untouchable tipper John J Mack?

    Mary Shapiro, if after this mess you still do not believe it is necessary to CLEAN HOUSE, then in the opinion of this seasoned observer you should promptly step down!

    With Much Deserved Disgust,

    Sparky

  2. mmjdiary says:

    If the SEC wanted to demonstrate that it is serious about leaving behind its Madoff and Stanford inattention, its porn-surfing scandals, the swinging door from agency employees to private pratice and this ugliness over Pequot, it should hire Mr. Aguirre as a consultant to help leaders there understand when, where, why, and how the agency missed the boat so many times. Not only would his insights be helpful but his very presence would send the signal to all SEC employees that the winds have indeed shifted. There would be a graciousness in such a step that would increase leadership’s credibility and really move the agency from where it is — still struggling to find its way — to the position of respect it deserves.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.