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City Attorney Mike Aguirre is ratcheting up his involvement in the Securities and Exchange Commission’s dealings with the city of San Diego, making moves in recent days in an attempt to influence the agency’s pursuit of council members and the work being performed by the independent monitor.
Aguirre told the SEC in a letter Friday that he believes the council members are purposely leading the city astray from the orders the agency included in its settlement with the city last November. He has been frustrated that the SEC’s probe into City Hall has fizzled since the settlement, leaving council members and other officials untouched thus far.
Further, he implied that the four council members he accuses of committing securities fraud — Scott Peters, Toni Atkins, Brian Maienschein and Jim Madaffer — should be charged by the agency. He noticeably leaves out a fifth council member, Donna Frye, from that discussion. Frye did not vote for the 2002 pension deal that widened the city’s pension deficit, but she did approve several bond disclosures that included errors and omissions that were at the heart of the SEC’s settlement with the city.
In 2005, Aguirre pushed to separate the city government from its officials in negotiations with the SEC. By settling on the city’s behalf only, the city could move on and not tie its fate to officials he claims conducted the wrongdoing. Legal bills for the council members have tapered off substantially since the city’s settlement nine months ago, indicating that the SEC may not longer have interest in the council members.
Still, Aguirre is pushing for individual sanctions. He cited the SEC’s recent concerns that the city is not establishing clear goals for meeting the regulatory agencies demands as a symptom of the council’s continued “adverse domination” of the city’s remediation.
The council on Tuesday decided to consult with the city’s outside securities counsel, John Hartigan, before sending the SEC a response to its concerns.
At Tuesday’s hearing, Aguirre cautioned Stanley Keller, the lawyer who was hired by the city to serve as its monitor as part of its settlement with the SEC, to not follow the path of other securities consultants for the city. Aguirre has criticized consultants at Vinson & Elkins and Kroll Inc. for advocating for council members instead of giving objective advice and analysis of the city’s financial dilemmas.
“One of the mistakes prior consultants made with us is they haven’t given us what we need, they haven’t given us the tough love we need, and they took advantage of us financially,” Aguirre said.
Aguirre also contacted Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, to express disappointment that the SEC has not pursued charges against the council members.