US Sen Grassley Seeks Answers From SEC On Staff Testimony

US Sen Grassley Seeks Answers From SEC On Staff Testimony - 12/9/2009

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US Sen Grassley Seeks Answers From SEC On Staff Testimony
Fawn Johnson

Dow Jones. December 9, 2009
_________________________________________________________________________

EXCERPT: A senior Senate Republican is seeking information from Securities and Exchange Commission Chairman Mary Schapiro about how the SEC will hold its senior staff accountable when they "provide less-than-candid testimony" to an internal watchdog. The request sent Monday to Schapiro from Senate Finance Committee ranking Republican Charles Grassley of Iowa also asks for clarification about SEC's rules regarding senior staff communications with outside parties. Grassley's letter comes on the heels of a report issued earlier this fall from SEC Inspector General David Kotz saying the SEC should clarify its policies on staffers' disclosure of nonpublic information. Grassley had asked about alleged inappropriate communications between a SEC enforcement officer, Linda Thomsen, and J.P. Morgan Chase and Co.'s (JPM) general counsel, Stephen Cutler, about J.P. Morgan's acquisition of Bear Stearns. Cutler was Thomsen's predecessor as SEC enforcement officer. Thomsen is no longer employed at the SEC. At Grassley's request, the inspector general reviewed the communications between Cutler and Thomsen. Kotz found that the discussions didn't directly violate the SEC's policy on external communications by senior staff, but he also said "appearance of impropriety" could have been avoided if other staff had been included in the talks. Grassley's latest letter to the SEC says some employees weren't forthcoming with information to Kotz. One employee "feigned ignorance" about an email exchange purportedly discussing whether JP Morgan had "juice" or pull within the SEC. "What steps do you intend to take to hold accountable employees who provide less-than-candid testimony to the Office of Inspector General and when do you expect to complete that process," Grassley asked. Kotz found that Cutler had sought assurances from the SEC that J.P. Morgan wouldn't be sued for any Bear Stearns actions when his company took over the failing investment firm.

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