SEC commissioners have denied a motion by former State Street Global Advisors executives John P. Flannery and James D. Hopkins asking them to affirm an administrative law judge's initial decision in October finding that the two did not violate securities laws. The move opens the way for a possible review of the case before the commission.
The commissioners' March 30 order was in response to a petition filed Nov. 21 by the Securities and Exchange Commission's enforcement division, seeking a review of the decision handed down by the administrative law judge on Oct. 28.
Mr. Flannery, meanwhile, who had served as SSgA's chief investment officer for the Americas in 2007, moved on Dec. 9 for “summary affirmance” by the commission of the law judge's decision. Mr. Hopkins, formerly a vice president and head of North American product engineering at SSgA, did likewise on Dec. 12.
In their order denying the motions by Messrs. Flannery and Hopkins, and granting the enforcement division's petition for review, the commissioners noted that their decisions reflect an understanding that important matters of public interest call for further review, and “should not be construed as suggesting any view as to the outcome of this case.”
The commissioners called for briefs in support of the petition for review to be filed by April 30, and briefs in opposition to be filed by June 13.
The complaints against Messrs. Flannery and Hopkins revolved around SSgA's Limited Duration Bond Fund, a strategy that suffered sharp declines as market volatility spiked in 2007 even though it was supposed to be focused on relatively less risky investments. The administrative case against the two focused on whether they were guilty of misleading or inadequate disclosure with regard to the portfolio's holdings.