In a September 2005 e-mail that committee chairman Arlen Specter, Republican of Pennsylvania , read at the hearing, Ribelin wrote to a supervisor: "I have serious misgivings about many of the decisions made in this investigation. . . . Something smells rotten."
At yesterday's hearing, scrutiny focused on the normally low-profile agency and its handling of the investigation into hedge fund Pequot Capital Management Inc.
"At best, it looks like extraordinarily lax enforcement by the Securities and Exchange Commission," Specter declared. "At worst, it has the overtone of a possible cover up."
After listening to lengthy testimony in which Aguirre and Ribelin on the one hand and the four SEC enforcement officials on the other contradicted each other, Specter said, "It's very, very troubling what the SEC has done here."
The four officials -- Aguirre's supervisors at the agency and enforcement director Linda Thomsen -- portrayed him as a hard-charging and aggressive attorney who also had trouble accepting the authority of supervisors and working in a structured organization.
They rebutted Aguirre's assertion that he was fired in September 2005 after he tried to subpoena Mack, now the chairman of investment house Morgan Stanley Inc., in the Pequot investigation.
Aguirre led the investigation, begun last year to determine whether Pequot had received a tip in 2001 from an individual about an upcoming $5.3 billion merger between General Electric Capital Corp. and Heller Financial Inc.
Aguirre has pointed to Mack as the likely person who had tipped Pequot to the merger, potentially enabling the hedge fund to buy and sell shares ahead of the announcement and make millions.
Aguirre says his SEC supervisors told him it would be difficult to obtain the subpoena because Mack had powerful political connections.
Robert Hanson, branch chief in the enforcement division, called the statements "utterly false."
Specter and Senator Charles Grassley, Republican of Iowa, also sharply criticized the investigation of the matter by Walter Stachnik, the SEC's inspector general.
The SEC notified Mack and Pequot last week that it had completed its investigation and is taking no action against them.
