Nowhere to hide

27 May 2010 By Richard Beales Follow @richardbeales1

Art Samberg and his firm are paying $28 mln to resolve SEC allegations of insider trading on Microsoft stock in 2001. Times have changed since then. But the fate of Pequot, where John Mack once ran the board, is a blunt reminder that watchdogs are eyeing even elite investors.

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Hedge fund group Pequot Capital Management and its founder, Arthur Samberg, agreed to pay nearly $28 million to settle Securities and Exchange Commission insider trading charges, the regulator said on May 27 a year to the day after Samberg told investors he was winding down the fund firm amid government investigations.

The SEC separately brought an enforcement action against David Zilkha, a former Microsoft employee who later worked at Pequot, for allegedly tipping the firm and Samberg with nonpublic information about Microsoft's earnings in 2001. That action will continue.

Samberg, who founded Pequot in 1986, began winding down the firm in May 2009. He told investors at the time that the pressure of government investigations running on and off since 2001 but at that point yet to result in any charges had made the situation increasingly untenable for the firm and for me.

Pequot and Samberg received SEC Wells notices essentially warnings of impending charges relating to the Microsoft trades in August last year, the Wall Street Journal reported. In agreeing to the settlement, Pequot and Samberg neither admitted nor denied the SEC's allegations.

Connecticutbased Pequot had $15 billion under management at its peak.

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Connecticutbased Pequot had $15 billion under management at its peak.

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