Morgan Stanley CEO Won't Face SEC Sanctions

Posted 07 October 2006 @ 08:51 am EET     Print     Reprint     E-Mail     Comments

WASHINGTON (AP) - John Mack, chief executive of Morgan Stanley, has been told by regulators that he will not face sanctions over a probe into possible insider dealing, a spokeswoman for the investment bank said.

The spokeswoman said that Mack had been informed by Securities and Exchange Commission (SEC) officials that he will not face any enforcement action in relation to an investigation by the agency.

The multibillion dollar US hedge fund Pequot Capital Management said in a letter to clients Thursday that it had also been informed by regulators that it would not be sanctioned as the SEC probe is wound up.

SEC regulators had been investigating possible insider dealing at Pequot Capital which manages some seven billion dollars.

Media reports have said the probe was linked to Pequot's holdings in Heller Financial before it was taken over by General Electric in 2001.

Morgan Stanley said in July that the SEC had sought testimony from its chief executive as part of its probe into Pequot.

Mack was briefly Pequot's chairman before becoming Morgan Stanley's chief executive in June of 2005.

The trillion-dollar hedge fund industry has come under increased scrutiny from Congress in recent months as lawmakers have held a number of hearings on the largely unregulated sector which controls vast amounts of cash.