Grassley confident SEC will implement change

WASHINGTON (Reuters) - U.S. Senator Chuck Grassley said on Tuesday he was confident the chairman of the Securities and Exchange Commission would implement Congressional recommendations designed to improve how the agency handles investigations.

A report issued in August from the Senate Judiciary and Senate Finance committee, where Grassley is the top Republican, urges the SEC to make a number of changes such as standardizing investigative procedures and improving the independence of its internal inquiry staff.

"Based upon what I've seen so far, I'm very confident," Grassley said at the Reuters Regulatory Summit. "(SEC Chairman Christopher Cox's) cooperation with us has been so good."

In January, the committee sent Cox a letter asking for an update on the progress of the implementation.

"Now we're trying to find out where he is along that line," said Grassley.

The Senate report said the SEC mishandled the 2005 dismissal of an agency investigator who said he was fired after an insider trading probe involving hedge fund Pequot Capital got too close to John Mack, now the CEO of Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz), the no 2 U.S. investment bank.

The agency investigator Gary Aguirre had said he wanted to subpoena Mack in the probe, but was stopped by SEC supervisors because of Mack's political clout.

At the time Grassley called the SEC's termination of Aguirre "highly suspect" and launched an inquiry into how the agency handled the dismissal.

Grassley said that after the report came out in August Cox came into his office and said he was going to institute the changes, which also included making sure supervisors keep records on outside communications involving investigations.

That level of cooperation from the SEC is in sharp contrast with other Congressional inquiries which Grassley said lawmakers are "always getting foot dragging."

(For summit blog: summitnotebook.reuters.com/)