What Secret Thing Made The Pequot Capital Management Inc Fall Apart?

Arthur Samberg's Pequot Capital Management Inc. is liquidating its core

hedge fund amid an investigation into potential insider trading, according

to a letter to investors obtained by The Wall Street Journal. The Securities

and Exchange Commission has been examining whether Pequot traded

Microsoft Corp. shares on confidential information provided by a former

employee of the computer company who was later hired by Pequot.

Pequot has denied any wrongdoing, but the paper said Samberg's letter,

sent to investors late Wednesday, explains that the probe has "cast a cloud

over the firm" and become a personal distraction. The Westport, Conn.-

based investment firm did not respond to a call for comment. According

to the letter obtained by The Journal, Pequot will spin out its Matawin and

Special Opportunities funds, while liquidating its core funds. Samberg

noted that the Pequot Partners Fund generated a net annualized return

of 1.8 percent this year through April 30. After closing the case more than

two years ago, the SEC reopened its probe after new information

surfaced late last year showing payments Pequot made to a key witness.

The documents, which emerged in a divorce proceeding, showed that

Pequot began paying $2.1 million to former Microsoft employee David

Zilkha in mid-2007. The initial $700,000 payment was made around the

time Sens. Charles Grassley, R-Iowa, and Arlen Specter, R-Pa., were

urging the SEC to reopen the case.

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Report: Pequot Capital hedge fund to liquidate Associated Press

This firm, worth about 3 Billion Dollars, was run by the well known

investor, Arthur J. Samberg. This fund has performed well over the

past 22 years consistently netting very good earnings during its

time of doing business. It appears that the suspicion of improper

trading of Microsoft stocks may have led to a loss of credibility and

the officers of the organization felt that they could no longer carry on

the business of the institution effectively. This article was written

by a retired aerospace engineer and the owner/operator of a consumer

electronics web store. Come check us out at Buy Comps4Less.