The Wall Street Journal is reporting that the Securities and Exchange Commission has launched an investigation of Duke Trustees chairman Bob Steel.
Over the summer, struggling Wachovia Bank had named Steel as its CEO--preposterously citing his ability to lead institutions in a “time of turmoil” as a criterion for the selection. In a CNBC broadcast on September 15, Steel asserted that Wachovia had a "great future as an independent company." He added, "But we're a public company, so we're going to do what's right for shareholders, I can promise you that. But we're also focused on the very exciting prospects when we get things right going forward."
Within two days, Steel was privately discussing a merger with JP Morgan--contradicting his assertion that Wachovia had a "great future as an independent company."
The Journal notes that "whether Mr. Steel misled investors and violated securities laws will depend on what Mr. Steel knew at the time of his comments. In general, securities laws say that an executive can't knowingly make a false statement that is material to the company's prospects."
Anyone who followed the lacrosse case wouldn't have been surprised by Steel's penchant to try to "spin" the press with misleading information--this is, of course, the same Bob Steel who privately claimed knowledge of "terrible, terrible" things in the lacrosse captains' house. He has never explained the evidence for which he based his claim, which the details presented in the Attorney General's report wholly rebuffed.
It is unclear whether Duke will allow Steel to remain as chairman while under SEC investigation--although, given the University's unwillingness to demand accountability for his failures in the lacrosse case, I wouldn't expect Steel's removal on this matter anytime soon.
[Update, 3.54pm]: A commenter correctly points out that Steel is entitled to the presumption of innocence. The mere fact of an investigation, however, places Duke in a delicate position. A chief responsibility of a BOT chairman at any university is raising and managing funds. I'm not aware of any recent case (at a prominent university, at least) in which a BOT chairman under investigation for alleged financial improprieities didn't step aside, if only for the duration of the investigation.