US: S.E.C. Asks Morgan Stanley Chief to Testify

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 U.S. Securities and Exchange Commission has asked Morgan Stanley (MS.N) Chief Executive John Mack to testify regarding what role he may have played in an insider trading case involving hedge fund Pequot Capital, Morgan Stanley said on Friday.

A former SEC investigator has said he was fired after pursuing evidence that Mack had tipped off Pequot about a pending merger. Mack has denied any wrongdoing, as has Pequot.

Morgan Stanley said it was notified of the SEC request on Thursday and the deposition could take place in coming weeks.

``Yesterday, the SEC contacted John Mack and asked that he be interviewed regarding the hedge fund matter that has been widely covered by the media recently,'' spokeswoman Jeanmarie McFadden said in a statement.

``John immediately responded that he is happy to meet with the commission staff, and he welcomes the opportunity to put to rest any issues surrounding this matter.''

The request comes days before SEC Chairman Christopher Cox is scheduled to testify before the Senate Banking Committee regarding hedge funds.

The SEC's investigation of Pequot drew fire several weeks ago when former SEC investigator Gary Aguirre went public with claims that top SEC officials put a stop to the probe after he requested Mack's testimony.

Mack briefly was chairman of Pequot before being named Morgan Stanley's CEO in June last year. He rejoined the brokerage after the ouster of CEO Philip Purcell, who had earlier pushed out Mack as the firm's president.

Morgan Stanley shares were down 67 cents, or 1.1 percent, at $62.67 in late morning trading on the New York Stock Exchange, about in line with the decline in the Amex Securities Dealers index (.XBD).

The SEC, which in the past has denied giving any preferential treatment to Mack or anyone else in the matter, declined to comment.

AMP Section Name:Corruption