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Smirlock's new troubles
Michael Smirlock has gotten into his share of trouble on Wall Street.
Michael Smirlock has gotten into his share of trouble on Wall Street. In 1993 he resigned as a Goldman Sachs partner after the Securities and Exchange Commission determined that he had allocated trades to particular customer accounts days after buying the securities. He was suspended from the industry for three months. Now, the former Wharton professor faces much more serious penalties. Last month the SEC charged Smirlock with securities fraud, and federal prosecutors filed criminal charges against him; both actions stemmed from a 1998 scandal at his three mortgage-backed securities hedge funds (Institutional Investor, December 1998). The SEC alleges that Smirlock covered up losses in the funds by writing his own valuations of portfolio holdings on blank forms that were supposed to be filled out by brokerage firms and by altering entries on valuation forms filled out by those firms. Smirlock's lawyer has said he,ll fight the charges. Says William Baker, an associate director of enforcement at the SEC, "We believe we have a very strong case."