Senate investigators are looking into whether senior officials at the SEC provided confidential information to former colleagues representing Wall Street banks. According to the Washington Post,
the inquiry began after the SEC’s Inspector General received an anonymous tip earlier this month. It alleged that Linda Chatman Thomsen, the agency’s director of enforcement, gave information about investigations into Bear Stearns around March to the general counsel of J.P. Morgan Chase, which at the time was considering whether to buy the troubled investment bank. The Oct. 7 complaint claimed that the inside knowledge obtained by the attorney, Stephen M. Cutler, a former head of enforcement at the SEC, allowed J.P. Morgan to low-ball its bid to purchase Bear Stearns.
The Post also reports that a copy of the complaint was also provided to Sen. Charles E. Grassley, the ranking member on the Senate Finance Committee, and that Grassley sent a letter last night to the SEC asking for information about all SEC investigations into Bear Stearns, as well as communications between SEC officials and J.P. Morgan Chase about those cases.
“Such conduct would reinforce the appearance that Enforcement decisions, and disclosures of information about them, are sometimes based not on the merits,” Grassley wrote in his letter yesterday, “but rather on access to senior officials by influential representatives of power brokers on Wall Street,” the Post reports.