Yesterday, the Wall Street Journal ran a front page story reporting that the Securities and Exchange Commission had “blown” the cover of whistleblower Peter C. Earle. The article claimed that Earle, a former employee of Pipeline Trading Systems turned government informant, had his identity “inadvertently” revealed through a “gaffe” on the part of an SEC lawyer, who showed a Pipeline exec “a notebook from the whistleblower filled with jottings about trades, calls and meetings.” The executive was said to have recognized Earle’s handwriting and told his colleagues, who had previously suspected but did not know for sure that “Pete’s the whistleblower.” The story was easy to believe because if you’ve been keeping up with the SEC over the last number of years, you know that this sounds exactly like something they’d accidentally do. Except that whereas the regulator fully copped to, for example, missing Madoff while trying to access 385 times/day, it says that this accusation? Is bull shit. It did not “inadvertently” “blow” anyone.

Here’s its strongly worded letter to the Journal saying as much:

The Securities and Exchange Commission in no way exposed Peter Earle as a whistleblower, and our use of his notebooks in an investigative deposition was neither “inadvertent” nor a “breach” or “gaffe” (“Source’s Cover Blown by SEC,” Page One, April 25). It was a deliberate decision, which SEC lawyer Daniel Walfish discussed in advance with his supervisor, who was present for the deposition in which the notebooks were exhibited. Nor did the fully authorized use of the notebooks in any way compromise Mr. Earle or the integrity of the SEC’s investigation of the Pipeline Trading Systems matter.

Although it was widely known among executives of Pipeline and Milstream Strategy Group that Mr. Earle had approached the SEC after he was terminated from Milstream—a fact volunteered by several witnesses and acknowledged by Mr. Earle long before any use of his notebooks—the SEC declined to confirm his identity and still treated his status as a cooperating witness as confidential. The SEC made sure to obtain all of the notes of the approximately six Milstream traders, and in the SEC’s deposition of Gordon Henderson (the supervisor of Mr. Earle and the other traders), the SEC used other traders’ notes along with those of Mr. Earle. The use of these traders’ notes—highly relevant evidence prepared in the ordinary course of their work at Milstream—in no way revealed whether Mr. Earle or any other trader was or was not cooperating with the SEC.

George S. Canellos


New York Regional Office

U.S. Securities and Exchange Commission

New York

SEC Did Not Blow Source’s Cover [WSJ]
Earlier: SEC Burns Whistleblower In The Most SEC Way Possible

14 comments (hidden to protect delicate sensibilities)
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Comments (14)

  1. Posted by The Truth | April 26, 2012 at 1:30 PM

    Methinks the tranny lover doth protest too much

  2. Posted by Strong sell | April 26, 2012 at 1:30 PM

    Listen….somebody definitely blew someone.

    -Dominique Strauss-Kahn

  3. Posted by Guest | April 26, 2012 at 1:51 PM

    Some people just have a way of inadvertently blowing things out of proportion.

    M. Lewinsky

  4. Posted by Im_a_Dude | April 26, 2012 at 2:05 PM

    What, the SEC do something wrong? Never. wasn't them. they followed all the rules and protocols.

  5. Posted by Bandersnatch | April 26, 2012 at 2:26 PM

    Whew. I feel much more confident in the SEC now and would gladly put my professional and financial life in their hands if I ever got involved in something untoward.

  6. Posted by guest | April 26, 2012 at 2:34 PM

    Glad that's cleared up. Only other question, will I be provided with a whistle, or will that blow my cover?

    – aspiring UBS whistleblower

  7. Posted by JaMarcus Russell | April 26, 2012 at 2:37 PM

    There's a joke here about SEC speed and the NFL draft tonite. In an ironic sense, of course.

  8. Posted by Guest | April 26, 2012 at 2:49 PM

    The SEC is requesting more credit?? It's credit that got us into this mess and the SEC and Federal Reserve and all of their crony bankster friends on Wall Street are not going get away with taking our jobs and soaking us on high interest student loans anymore!

    – bearded NYU grad/freelance artist gearing up for The Battle in the Borough on May 1st

  9. Posted by guest | April 26, 2012 at 3:00 PM

    is it a funny joke?

  10. Posted by guest | April 26, 2012 at 3:14 PM


  11. Posted by Ag'em Giggies | April 26, 2012 at 3:57 PM

    What's the difference between an SEC cheerleader and a catfish? One has whiskers and stinks; the other is a catfish.

  12. Posted by Hippie Jones | April 26, 2012 at 4:00 PM

    Draft beer, not athletes

  13. Posted by JaMarcus Russell | April 26, 2012 at 4:44 PM

    About as funny as my career, yep. Unless you're a Raider fan.

  14. Posted by sohbet odalari | December 25, 2012 at 5:01 PM

    very blog thanks